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How is interest calculated?
Interest is paid at 3.00% gross AER, however this includes a 0.9% bonus until 31st October 2013, after which date the rate will revert back to 2.10% Gross AER.
Is interest accumulated to my savings?
Yes, the account is a Junior ISA (Individual Savings Account) the interest must accumulate to the existing savings.
How long do I have to tie my savings up for?
The savings in the Junior ISA cannot be accessed until the child reaches the age of 18, at which point the account can be closed or rolled over into an ‘adult’ ISA.
Can I get access to my savings?
No, your child cannot access the savings in the Junior ISA until they reach the age of 18.
How do I manage my account?
The Nationwide Smart Junior ISA can be opened online and a passbook will be issued. The account balance cannot currently be viewed online.
Payments can be made into the Junior ISA by visiting a branch of the Nationwide or electronically.
For a Junior ISA to be opened, the child must be below the age of 18, a UK resident, and not already have a Child Trust Fund.
How much can I save?
The maximum which can be saved into a Junior ISA is £3,600 per tax year.
The Nationwide Smart Junior ISA has a low minimum contribution level of just £1.
How is the interest taxed?
Because it is a Junior ISA the interest is paid without the deduction of tax.
What are the advantages of this account?
- No tax is payable on the interest
- The minimum opening balance is low, making the Junior ISA accessible for all savers
- The Nationwide are members of the UK Financial Services Compensation Scheme
What are the disadvantages?
- The rate includes a bonus for the first two years, the only other Junior ISA currently available, from the Skipton Building Society, does not include this bonus, yet pays the same rate of interest
- There are accounts aimed at children which currently offer a better rate of interest, although the interest may be taxable depending on how these accounts are funded
The Investment Sense Verdict
There are currently only two Junior Cash ISAs available at the moment and at the moment the Nationwide account receives the thumbs down from us.
We prefer the Skipton Building Society Junior ISA because the interest rate on the two accounts is identical, however the interest payable by the Nationwide will drop by 0.9% from October 2013.
Should you wish to discuss Junior ISAs, or alternative ways of saving for your children speak to one of our team of Independent Financial Advisers today. They can be contacted on 0115 933 8433, 0845 078 7774 or by sending an email to info@investmentsense.co.uk.
