Savings account for baby?

[jazzcat28]

Currently 34wks pg with DC1 and already had a couple of hints from the soon-to-be grandparents and great grandparents that they would like to put a small deposit into some sort of savings account to mark the arrival. We are very lucky to be in receipt of such gifts and I want to make sure it goes to DC1 rather than in my bottomless pit of an overdraft Plus DH and I had already decided to start putting a small amount in a savings account for said child anyway.

Is it possible to open up some sort of savings account/scheme/bond in the child's name but parent-controlled until 16 or 18? Or would it be better and easier to open up an account in our names and we look after it until DH & I think they are old enough to have it?

I know for a fact that my grandparents will post a cheque made out to DC1's name (once they know it) so want to find out the facts beforehand.

I already have an e-saver account and an ISA, but don't go anywhere near the limits for tax-free savings. DH has only a standard current account.

Am a bit clueless and wondered if any of you had any suggestions?

We just have a Nationwide children's account. It's in my name on behalf of DD so can pay in cheques made payable to either of us. It has a passbook so I plan to hold onto that for the foreseeable future! We used Nationwide because that is who we bank with, and her account appears on the internet banking.

The children's ISA can't be accessed until they're 18, using a normal account means hopefully we can teach her about saving for expensive things and use some of the money earlier if required.

The R85 form comes with the application pack, then no tax is deducted on the interest as DD isn't a taxpayer.

trilby thanks for the reply! Useful to know that you are in control but cheques can be made out to your child too. I'm not expecting thousands to be deposited every year so hopefully tax won't be much of an issue but wasn't sure exactly how it worked.

YY junior ISA licked until 18. Ours are with Skipton.

Locked!

My children have a pass book account with Nationwide too. On birth we put all the money of "buy something for baby" into account and brought things as we needed them. Now their birthday and Christmas money is put in it. We also add to it.

Im about to withdraw it and convert their money to Premium bonds.

Im tempted to keep quiet about amount of savings til they are 21 or have shown commitment to funding driving lessons/car themselves.

So I had a quick peek at the Nationwide website, it seems the choice is basically between higher interest rate with an ISA type account but no access until 18th birthday, or a 'normal' account with a much lower interest rate but with instant access?

That's what you get with most banks/building societies. Instant and shocking interest or long term and better rate.

I don't want to tie money up for too long. You could look at longer term one year fixed bonds when £500 in account I think.

I guess it would make sense whilst we are more financially on a shoe string to have access to the money in case we need it urgently. Can always convert to premium bonds/1-3yr bonds at a later date as you say.

A good guide here on children's savings accounts and ISAs which includes best buys

www.moneysavingexpert.com/savings/child-savings-tax-free

DD has 2 child savings accounts - one is instant access in DH's name on her behalf, the other is a junior ISA in her name, only accessible when she's 18. We try to split any gifts plus our own savings for her between the 2 accounts, so she will have some money available for special spends when she's a bit older, plus the nest egg for later.

General point - junior ISAs come in both cash and share versions. Make sure you know what you're getting and happy with risk/reward associated with that. And there are annual limits on ISA savings (a little over £3k I think) but these apply per child and are separate from your own ISA allowance.