Cash Child Trust Funds offer best returns
Cash Child Trust Funds offer better returns than stakeholder CTFs, a financial expert claimed this week.
Chris Edwards, head of savings and mortgages at Yorkshire Building Society, said the number of people opting for a cash CTF has soared in recent months.
“We’re not surprised by our new figures which show an increase in [cash CTF] take-up, as recent research has found that cash Child Trust Funds have proved to offer greater returns than stakeholder versions,” Edwards said.
Yorkshire Building Society has seen a 20% increase in the number of parents opening a cash Child Trust Fund.
However, Edwards warned that many parents could be losing out by shunning CTFs in favour of traditional savings accounts.
“Over half of parents are saving more money into other savings accounts for their children rather than their Child Trust Fund,” he said.
“It’s great news that parents are doing this for their children but often these other accounts pay less interest than a Child Trust Fund, which could cost them dearly over 18 years.”
A parent saving £10 per week for their child in Yorkshire Bank’s cash CTF would amass a total of over £11,700 in 18 years.
However, saving the same amount in an account paying just 1% less in interest would see the total drop to under £10,900.
“We’re urging parents who have existing Child Trust Funds or those who are in the process of choosing a provider, to shop around for a good deal,” Edwards concluded.