Martin Lewis issued ‘take out an ISA’ advice to a caller who asked what to do with a maturing child trust fund. The personal finance expert was appearing on his BBC podcast with presenter Adrian Chiles and explained what a listener needed to do.
Host Adrian Chiles said: “Anita wants to know where she should put her daughter’s Child Trust Fund when she turns 18.” Martin said: “First of all well done for tracking your daughter’s Child Trust Fund down.
“If your child was born between September 1 2002 and January 2 2011 – so that’s roughly aged 14-23 if you’ve got the child trust fund the state would have put money in and parents could have added money too.
“There are hundreds of thousands of people who have lost track of those child trust funds you can track them down on gov.uk. So if that’s ringing a bell for you or for your child of that age then go and track it down.
“When your child trust fund matures it will generally automatically be moved into an ISA. But it will be in an ISA with the same product provider you got your child trust fund with.
“The first think I will say is you should make an active choice to have it in the right place not a default choice to have it moved automatically into that place. And go and find if it’s the best stocks and shares provider for you or if it’s the best cash ISA interest rates which are paying up to 4.8 per cent at the moment on a standard rate.” Mr Lewis said technically it was important to remember that the parent by the age of 18 doesn’t control the money – it’s down to the teenager to transfer the money.
Mr Lewis added: “There’s a Lifetime ISA as long as you’re not buying a property above £450,000 if she’s going to buy a property at some point in the future. You get a 25 per cent boost from the state for whatever you save in there so you can port up to £4,000 into a Lifetime ISA and then the state would add £1,000 on top. They would be your two main options – or she could spend some of it if she wanted to!
“Final note – if you have money in a child trust fund for a savings child trust fund certainly move it to a junior ISA, do a transfer to a junior ISA, top paying junior ISA at the moment is Coventry Building Society, that’s not available to open online, in which case it’s NS&I the state-backed finance provider paying 4 per cent because child trust fund rates are much worse than junior ISAs.”
