Halifax has launched a new Junior ISA savings account which offers an unrivalled interest rate if the person with parental responsibility for the child with the ISA, also has their own ISA with Halifax.
The Junior ISA has a competitive interest rate of 3% AER variable. The big differentiator though is that this interest rate is doubled to 6% AER when the person with parental responsibility for the child also has their own ISA with Halifax.
This is a challenge to the ISA market, in much the same way as Halifax evolved the ISA transfer market when it launched its ISA promise to ensure customers did not lose so much interest when transferring ISAs between providers.
Richard Fearon, head of Halifax savings, explains, “It’s important for children adopt a positive savings habit at an early age and learning from their parents is the best way to achieve that.
“A Junior Cash ISA is a really savvy way to plan for the future, and when parents save tax free with us too, we’ll boost the rate to recognise the important role family plays in saving.”
The minimum opening balance for this savings account is £1 and the maximum is the current Junior ISA limit of £3,600. No withdrawals are permitted until the child is 18, except in the exceptional circumstance of the child’s death or terminal illness but transfers-in and transfers-out are permitted.
MoneyHighStreet comments: “This Junior ISA launch is a welcome addition and no doubt will be highly attractive to those parents who already have an ISA with Halifax or who are prepared to open one there in order to benefit from the higher rate of interest on offer.
Lloyds TSB recently launched their Junior ISA, no doubt others will soon be entering the market too.
Saving for your child’s future is, or at least should be a high priority in our opinion here at MoneyHighStreet. It really can set up a child for their later life.
Do make sure you regularly check that you are getting the best interest rate you can. If you’re not, take the time to move the account to get a better deal.”
“One issue of concern though is that for those eligible for a CTF, a Junior ISA is currently not accessible. This seems totally unreasonable – it is vital that all parents can maximise their savings into competitve accounts and have an easy to understand, consistent set of accounts to compare and understand what offers them the best deal.
“Surely those with a CTF should have the option to open a Junior ISA? Perhaps the condition is that any money saved into a Junior ISA has to be transferred across to the new account?
“The Government has indicated that once Junior ISAs are up and running they will explore this issue. In our opinion, the sooner they do this the better.”