NS&I Children’s Bonds to close next month
National Savings & Investments will close its popular Children’s Bonds next month after introducing its new Junior Isa.
NS&I confirmed that the 800,000 bonds opened by parents, grandparents and great-grandparents could be kept until maturity, but did not say what would happen to the accounts after that. It said it would write to customers to explain their options.
A spokesman said Children’s Bonds would no longer be available from September 2017, although the exact date has yet to be set. More than £500m is currently held in the bonds, which are for children under 16 and pay 2pc annual interest for five years. The maximum that can be saved is £3,000 per child for each issue of the bond (the current issue is 36).
The interest is tax-free so does not count towards the adult account holder’s personal savings allowance. When the child turns 16, they can look after the bond themselves.
NS&I last week launched a Junior Isa, which also pays 2pc tax-free. Parents or legal guardians can open the account but anyone can contribute as long as the total doesn’t breach the 2017-18 Junior Isa allowance of £4,128.
However, as savings options for children go, it’s far from competitive. The top Jisa, from Coventry Building Society, pays 3.25pc. Parents who pay in their child’s full allowance would earn £134 a year in interest from Coventry; NS&I would pay £83.
Nationwide, Halifax, TSB, Tesco Bank and Darlington Building Society all offer Jisas with a 3pc rate. These accounts would pay £124 in a year.
There are also a number of non-Jisa savings accounts for children that may be better suited to those with smaller sums. Saffron Building Society and Halifax have regular saver accounts for children that pay 4pc. Up to £100 a month can be deposited in the accounts for a year. Santander’s Mini 123 current account pays 3pc on balances between £200 and £2,000.