Financial spring cleaning appears to be full swing as the number of people paying into Child Trust Fund
s has seen a boost at the start of the New Year, according to research.
A study by Engage Mutual has revealed that January has proved the most popular month for parents to open up a Child Trust Fund(CTF) with almost 12 percent of the total figure for 2007, compared to November which saw figures halved.
Karl Elliott, 3GB spokesperson for Engage Mutual said: "New Year is a time when many of us resolve to sort out our finances. As last year’s experience in our CTF data shows, many parents will also open a CTF in January. However, we really encourage parents to invest little and often for their child for the long term, not just at the beginning of the year."
However, despite Child Trust Funds being designed to give working class children a much-needed nest egg to kick start their adult lives, research by the Social Issues Research Centre on behalf of The Children’s Mutual has shown that it is middle class parents that are taking the most advantage if the Government's CTF initiative.
The study found that twenty-three per cent of CTFs are currently being topped up by parents to the tune of £21.20 a month on average, with 47 per cent of parents topping up their children’s funds using direct debits.
And while children are set to benefit from the new initiatives, parents are also keen to save their pennies as a rush on ISA deposits signals the approach of April.
Kevin Mountford, Head of Savings at moneysupermarket.com, comments: "Many providers are bringing their headline-grabbing cash ISA offerings out much sooner in the year than previously. Their desire to secure more deposits is no doubt due to last year's Northern Rock debacle, which highlighted the need for providers to have substantial deposits. Savers can certainly take advantage of this as we head towards 5 April and the end of the tax year.
"This week, we saw Icesave's Mini Cash ISA enter the market paying 6.1 per cent AER, following hot on the heels of Scarborough Building Society's new Direct Notice ISA, which tops the table at 6.3 per cent. The top paying cash ISA of a year ago wouldn't even make today's top ten, showing how keen banks are to lock in your cash as early as possible."
Mr Mountford continues: "Savers shouldn’t be blinded by solely the figures. They need to look at the notice period and whether they allow transfers in. If you’ve been using your ISA allowance diligently for a number of years, you’re likely to have a tidy sum stashed away that you could transfer into a new, higher-paying account. About half of the top ISAs on the market don't allow you to transfer previous lump sums in, so savers need to read the small print."
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