Earn double with a Junior Isa and avoid a potential pitfall when your child turns 18

Child Trust Fund accounts were launched in 2005 to encourage parents to save for the future of their children

Parents can more than double their returns by transferring their money from a Child Trust Fund to a Junior Isa.

Moving your money also means that you avoid a potential pitfall when your child turns 18 years old.

Child Trust Fund accounts were launched in 2005 to encourage parents to save for the future of their children.

Child Trust Fund accounts were launched in 2005 to encourage parents to save for the future of their children

Child Trust Fund accounts were launched in 2005 to encourage parents to save for the future of their children

This month, more than 75,000 children eligible for the account will be 16, according to OneFamily, the largest provider of them.

At this age, children can take control of the fund and decide where they want to invest their money, although they can not keep it for two years.

The now-defunct child allowance scheme provided children born in September 2002 with cash vouchers of £ 250 or £ 500 depending on the parents' income. A second payment was given to them when they turned seven.

This can be invested in cash or shares. Parents can supplement the account with a certain amount each year.

More than six million trust funds have been set up. The scheme was scrapped in 2010 because it turned out to be too expensive.

Many providers refused to switch and hindered parents who wanted to change accounts for a better price. Companies focused on the new Junior Isa, for which often higher prices were paid.

Money Mail campaigned for years for the government to let parents transfer money from Child Trust Funds to the new products.

A child with a Nationwide money insurance fund could, for example, earn 1.1 percent (£ 11 interest on £ 1,000) at that time, but a younger sibling could get 3.25 percent (£ 32.50) with their Junior Isa .

In 2015, after a two and a half year campaign by Money Mail, the government had savers transfer the money in their trust fund to a Junior Isa.

You should encourage your child to move their money now for a better price. Coventry BS currently pays the best Junior Isa rate at 3.6 percent, while Nationwide offers 3.25 percent.

OneFamily, which provides nearly 210,000 Santander Child Trust Funds after the bank has transferred the management of its accounts in 2009, pays 0.85 percent on balance & # 39; s to £ 750, 1.25 percent to £ 1,500 and 1.75 percent if there is more than £ 1,500 in the account.

Leeds BS trust fund pays 2.15 percent; at Skipton the rate is 2.5 percent or 2.25 percent, depending on the problem. At Yorkshire BS you only earn 1.95 percent and Britannia, now part of Co-op Bank, 0.8 percent.

You can also still add money to Junior Isas for your child. The current limit this tax year is £ 4,260, the same as for a Child Trust Fund.

When children are 18, they can turn a Junior Isa into a & # 39; mature & # 39; Isa and continue to earn tax-free interest. Tracking the tax-free account could be useful if they want to continue saving in the coming years or raise money for university fees or a home deposit.

If their money is still in a Child Trust Fund, they must withdraw it before it is moved to an adult Isa, and they can only reinvest the maximum Isa limit (now £ 20,000). HM Revenue & Customs says it is considering what it must do to change the rules, but there is no guarantee that this will happen.

sy.morris@dailymail.co.uk

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