Britain’s biggest building society Nationwide has pulled its Junior Isa (Jisa) from sale with immediate effect: a stunning snub to the government’s saving scheme for children. Nationwide says it’s dumped the Jisa in favour of an ordinary kid’s savings accounts after parents said they wanted to keep control of their children’s money – and be able to access it when they wanted.
Existing Jisas and other accounts will carry on. For new accounts, in place of its Jisa and other kids’ accounts, Nationwide now has just one option for children, Future Saver, paying 3.5%. If your child has got a Nationwide Jisa, then make sure you keep an eye on the rate going forward: currently it pays a very good 3.25% but this could change.
Jisas can be in either shares or cash. You can put up to £4,260 into a Jisa this tax year away from the grasp of the taxman. The sticking point with Jisas (both cash and share) is that the money cannot be withdrawn until the child is 18 – and then, it is theirs to do what they like with. With a standard kids’ account, such as Future Saver, then depending on individual account restrictions, parents can dip into the funds when they like: which is a good/bad thing depending on your point of view.
However, the new Nationwide Future Saver isn’t completely open-access. Only one withdrawal can be made a year without an interest penalty – if you make more than one the rate falls to 0.5%. Up to £5,000 can be saved every year. While the rate of 3.5% is really good it only applies if a parent has their main current account with Nationwide. If not, the rate is 2.5% - which is still decent.
If I had a current account with Nationwide, I’d certainly be tempted. And, of course, the good thing here is that you can still contribute to a Jisa (cash or share) and have this account too – if you’ve got that amount of money you want to put in your child’s name. I’ve got a share Jisa for my son, although it doesn’t have much in it (just the remnants of a Child Trust Fund, really). Over the long term, shares should outperform cash – which is why I’ve avoided cash Jisas.
See our SMM guide to Jisas here.