Child Trust Fund interest rates soar
Parents are being urged to reassess their Child Trust Funds as the gap between the best and worst accounts widens.
MoneyExpert.com research shows that average standard interest rates on cash Child Trust Funds have increased by some 1.19% in the past year from 5.15% in October 2006 to 6.34% now.
But the independent financial comparison website says the ongoing savings price war has created a widening gap between the best and worst CTF deals.
MoneyExpert.com’s research shows that at the end of last year the worst paying CTF was only 1.75% below the best buy. However the website’s latest figures show the gap has increased to some 2.75%.
A family that invests the maximum £1,200 in the first year only would lose out to the tune of around £1,780 over 18 years if they took the worst deal compared with the best, according to MoneyExpert.com.
But the losses could be far higher – the website says a family investing the full £1,200 every year for 18 years could potentially miss out on as much as £12,164 in unpaid interest.
Sean Gardner, chief executive of MoneyExpert.com, said: “The gap between the best and worst CTFs is too large to ignore. Many parents are planning to build up a healthy savings pot for their children and CTFs are a great way to do that.
“However, just how much money your kids will eventually be able to access depends to a large extent on the decisions you make now. The rises in the Bank of England Base Rate over the past year have sparked something of a savings price war, and that has extended to Child Trust Funds. If you are careful there’s nothing to stop you from getting a great deal.”