The Top Children’s Savings & Investment Accounts | Car Finance Mis-selling Update

Martin Lewis has everything you need to know about children’s saving and investing, including Junior ISAs, Child Trust Funds, top savings, Premium Bonds and even children’s pensions. Plus, an update on the car finance mis-selling saga, an update on Lifetime ISAs, you tell us when you’ve felt the richest, and this week’s Mastermind is on personal loans.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 1:47Speaker 02

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• 1:50Martin Lewis?

  Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Now, usually much of it comes from my BBC Radio 5 live show with Adrian Charles, but don't worry, there's also bonus money-saving tips just for you lucky, lucky podcast listeners. In today's pod, an update on

• 2:10Martin Lewis?

  Our finance reclaiming, it's now thought 14 million people could be due payouts. Our big topic this week is also an ickle one. Children's savings, probably the single most asked subject I get questions about. So I'm going to run through savings products, junior ISAs, what tax children pay, child trust fund, premium bonds, investing and even children's pensions. Also, lifetime ISAs. Why sadly, it looks like there's not going to be any improvements to this brilliant, brittle, broken system soon. This week's tellers is on, when have you felt the richest? And will Adrian get the mastermind right? We can always hope. The subject, personal loans.

• 2:55Martin Lewis?

  Play the theme tune.

• 3:12Speaker 04

  Martin, I should begin by saying, in reference to the not particularly interesting saga of me trying to get the, my torn £10 note replaced. I went to my local HSBC branch and they said, oh no, you've got to go to a full service branch, or something I think they called and get that, which is about 15, 20 minutes away. So.

• 3:35Martin Lewis?

  Have you thought of just, have you sellotaped it, as I suggested?

• 3:38Speaker 04

  I haven't, I just want a nice new one. I don't want.

• 3:41Martin Lewis?

  Why don't you sellotape it? And as long as it all fits together, a shop will probably take it.

• 3:45Speaker 04

  Well, sooner or later, I'll go to a shop, I'll hand it over and they'll give me back. And I'll say, but Martin Lewis said, I've got to, you know.

• 3:54Martin Lewis?

  Martin Lewis said, the formal thing to do is to send it to the Bank of England.

• 3:58Speaker 04

  Okay.

• 3:58Martin Lewis?

  And said, but I would try sellotaping it and seeing if a shop accepts it. Because it is an integral £10 note that just has a rip down the middle, it should still be acceptable. But legally, your legal right is to send it to the Bank of England.

• 4:11Speaker 04

  Okay. I can tell you losing patience with me on this issue. Don't worry, I won't stretch it into a third week.

• 4:19Speaker 04

  Let's move on to car finance misselling and this ongoing situation. The regulator's given evidence to Parliament. What's the update?

• 4:28Martin Lewis?

  I don't think I'm going to say there was anything rocket science new that we didn't know, but we have had confirmations and I know so many people are waiting for the news. Now, what the regulator said and the boss of the regulator, Nick Ilrathy, told MPs in the Treasury Committee, another Treasury Committee report, is they believe about 14 million people are likely to be due compensation. Now, people remember this has been very complicated because there are two different types of car finance reclaiming. The Supreme Court mainly struck down one type, as was expected, but the one that's always been there is this discretionary commission arrangement type of misselling.

• 5:06Martin Lewis?

  That's where, when you got a higher purchase or PCP deal between 2007 and 2020, the car finance broker or dealer could charge you more interest rate and then get more commission in return without telling you that. And if it did that, it's called discretionary commission arrangement and it looks like that is going to be come down by the regulator of misselling, so you're going to be due some money back. The important thing to understand is you will not know if that happened to you because you weren't told it was the whole part of the misselling. So the only way to find out is to put a complaint in and the regulator is still saying, its exact line is, you know, if people think they have a complaint, they should put a complaint in now.

• 5:49Martin Lewis?

  Just don't use a claims firm because this may end up being an automatic payout process. If you want to put a marker in the sand, there are free tools out there that you can put your complaint in through and we'll do it all through you. What is happening at the moment is there's a consultation on the redress scheme. That consultation is due to be published in early October. I think payouts are expected to start next year, but that is dependent, the exact timing is dependent on whether the regulator goes for an automatic Scheme where you have to opt out of being paid, which virtually no one would. In other words, the different car finance firms will have to contact everyone they think has been mis-sold and pay them automatically. Or an opt-in scheme where they contact you and ask, do you want to be opted into a complaint? That would be quicker.

• 6:34Martin Lewis?

  So there's a sort of balance here. Do we want the quick scheme? Or do you want the scheme where people will be paid automatically? My suspicion is they will go for the quicker scheme where people will be contacted, but then they'll have to say, yes, I do want to put a claim in. And there are also going to be some difficulties of evidential ones. But what the most interesting thing I think came out of this is one of my great concerns, because this goes back to 2007, is many car finance firms don't keep details of customers' agreements more than six years after the agreement is closed. And they don't have to, to be fair. So unless you have your agreement, it might be difficult to prove. But what the regulator said is, and this is a quote, "Where a firm says to us they don't have data, we're not just going to take that at face value.

• 7:20Martin Lewis?

  We will look at it very forensically." But he says that a large number of firms have been cooperative. So what I suspect will happen, if I look back to what happened in the PPI reclaiming issue, is what would happen then is if you knew, if you had proof that you had a PPI at the time, but you didn't have any proof that you were mis-sold it, they would go back and look at similar cases in the same place at the same time to see if this was systemically being done. And if it was, they would generally say, well, it is on the balance of probability, likely the same thing happened to you. So you would get a payout. So all that is in the mix at the moment. But apart from putting a complaint in if you haven't done one already to find out if you did have a discretionary commission arrangement, that people just need to sit

• 8:05Martin Lewis?

  on their hands and wait. This will all be coming out sometime, probably in the next year, and there'll be news on it in October.

• 8:14Speaker 04

  Let's move on to the best place to save for your kids. One of the biggest items you get questions on or know. Kelly starts us off, said, I'd like to understand what I can do for my son. Give him a healthy start financially. I don't really know much about the types of saving accounts out there for children. So we don't know how old a son is. Let's assume he's a Ben.

• 8:34Martin Lewis?

  He's a little one. Well, before I answer that, I think I want to do a warning. I often hear I want to give the healthiest start for my son. And I suspect in this case, that's absolutely fine. But I do have a little warning to parents. I know many parents scrimp and save to put money aside for their kids, even sometimes when they can't afford it. And for me, where this fits into the financial pyramid of the way that you should act is a bit like when you're on an airplane and they do the safety announcement and they say, "In the unlikely event that the cabin depressurises, oxygen masks will drop from the ceiling. If you're with a child, please ensure you put your own mask on before putting it on the child."

• 9:18Martin Lewis?

  For the simple reason that if you're going to be starved of oxygen, you're not going to be able to help your kids. So get your mask on first. And I feel that that's roughly similar in terms of this. If you're struggling to breathe financially, you won't be able to help them. Building a nest egg for kids isn't the priority. Family financial security is. So only do it after sorting out your own costly debts and ensuring that your urgent living costs are met, there's a roof over your head and the kids' head, and that they're being fed. It isn't the number one priority. If you've got money and you're in stable finances, it's a great thing to do, but it's not number one priority. But let's assume that all that is fine. Look, I mean, we're going to go in, I know we've got a lot of questions in on this and we're going to go into a lot of detail.

• 10:03Martin Lewis?

  Really, the basic choice to start is you just go for a top children's savings account or you look at a junior ISA or its predecessor, the child trust fund, which is where money is locked away until the child is 18 in a tax-free environment. Then we'll come on to this in a moment. Actually, most kids don't pay tax on savings anyway. So if you're just looking for basic children's savings account, the top payer in terms of interest, and it's actually, by the way, if your kids are old enough, talk to them about interest. Adrian, here's to present working lunch. How would you define interest to a child?

• 10:36Speaker 04

  How would you define interest to a child?

• 10:38Martin Lewis?

  It's not a mastermind question, don't worry.

• 10:40Speaker 04

  I don't know, a way of making, save your, put your money away and it grows a little bit.

• 10:46Martin Lewis?

  Yeah, and so I, I would say the interest is, interest is the price of money. If you're going to save with a bank, as the bank can use your money, and it does, it will loan your money out to other people and it will make money on that. Then it should pay you. And as different banks pay different amounts of interest, that's the, the, the payment they will give you for saving with them. And it's done in a percentage terms, you should find the one that pays you the most. Now, the, the top pair, as I was saying at the moment, is the Halifax Kids Monthly Saver. That pays five point five percent fixed for a year. You can save between ten and a hundred pounds a month. You can skip months if you don't have the money in a month. You can't do withdrawals, so if you wanted to take the money out, you must close the account early.

• 11:32Martin Lewis?

  It's available for children aged zero to fifteen. You can apply online or in branch and, but it must be opened by a parent or guardian. That's the highest interest rate, but you can hear it's only on relatively small amounts and it's a monthly savings account. After that, if you want top lump sums, then you've got the Nationwide Flex One Saver. That pays five percent interest on up to five thousand pounds. Though you have to open the Nationwide Flex One Children's Current Account to access it. That's for ages eleven to seventeen. Parents or guardian must apply for under thirteens. Older children can, and they must do that in branch. Older children can apply online. You've also got HSBC My Savings at four point five percent. Uh, on up to three grand and Kent Reliance Children's Saver, if your kids are lucky enough to have more.

• 12:18Martin Lewis?

  Pays four point three percent on up to twenty five thousand pounds. They're all easy access, but you do have to check the turns on them. So that, that's your start point. That's where you look at, and I know we're going to come on to junior ISAs and the alternatives in a moment, so I'll probably stop there and let get on to another question.

• 12:32Speaker 04

  Okay, Les has six grandchildren. When each was born, he opened an account and put twenty pounds per month in each. I know it isn't a lot. I don't know, but currently the eldest, who's sixteen, has almost five K and the total pot is around eighteen K. We give them the money when they're eighteen. We have all the accounts in a basic savings account with the Halifax, which is two point four percent. Is it worth moving the accounts to something with better interest?

• 12:58Martin Lewis?

  Yes, one hundred percent. I mean, you've got nearly twenty grand there, so at two percent, you're making four hundred pounds interest. The best accounts pay up to five percent, so you should be making about a grand's interest, or your grandchildren should be making about a grand's worth of interest. So you're foregoing six hundred pounds worth of interest a year and you're foregoing the compound growth on interest on top of interest. So, you know, all the accounts I've just mentioned, the Nationwide Flex One Saver, the HSBC My Savings, or the Kent Reliance Children's Saver, for those who've got over three grand, all pay substantially more than where you've got the money. That get the parents to open those new accounts for them, get the kids to take the money out of the old accounts and just put it into the new accounts and earn, in all those cases, nearly double or more than double the interest you're getting right now.

• 13:43Speaker 04

  And by definition, it can be put away, so it doesn't have to be instant access because they don't give it to them until they're eighteen, so you can lock it away.

• 13:51Martin Lewis?

  No, that's not correct. These are easy access. The kids can take the money out. In many cases, depending on the age.

• 13:57Speaker 04

  He says they don't give the money.

• 13:59Martin Lewis?

  Sorry, did I mishear the question?

• 14:01Speaker 04

  Yeah, well, I'm sure I'm wrong, not you, but he said that we will give them the money when they are eighteen.

• 14:07Martin Lewis?

  But he said he's got them in children's savings.

• 14:11Speaker 04

  No, we've got all the accounts in a basic savings account, he said, with the Halifax.

• 14:15Martin Lewis?

  Okay, so I misunderstood. Well, first of all, if you're saving in your name, then this isn't the kids' money, this is your money, and you would be taxed on it, and if you build up a certain amount.

• 14:28Speaker 04

  I think by implication it's in their names somehow. He said we have all the accounts in our basic savings account with Halifax.

• 14:35Martin Lewis?

  Well, let me be very plain. It is not up to him to decide whether he's going to give the money in their name. And actually, morally, I think he should let the kids know, certainly when they get to a certain age, that they have that amount of money, because it is their money and they have a right to access it. And in all the accounts I mentioned. The parents or guardian must apply. Look, I don't think this is a problem. I've done so many shows with children over the time. I remember I had a very nervous woman who had saved money for her kids and she was petrified about telling the children that they had money in these savings accounts, rather a lot of money. You know, it's about 10, 12 grand and she's worried her kids would be irresponsible. And I did a show and we filmed her and she told the kids and the kids went, oh, that's good. And she said, but I don't want you to touch it. I said, okay. And she's like, what? And she said, oh, well, okay.

• 15:18Martin Lewis?

  If you put it aside, it's nice to know about it and we'll do what you say. I think, I think it's really quite important. Your children, the idea that on their 18th birthday, a child will suddenly become financially responsible, having been financially irresponsible beforehand, isn't true. And the best chance you have of your children being financially responsible is by educating them about money and engaging them and talking to them and getting them involved and finding the best interest rates with you and understanding about interest and understanding how it compounds and how it grows. Now, I'm not saying you give this to a five-year-old, but certainly once the children are 13, 14,

• 15:57Martin Lewis?

  15, I think you should, my view is you should be telling them about the money and letting them know about the money and working with them. I mean, what a great exercise for a 13, 14-year-old child to suddenly say to them, hey, do you know, we've been saving for you, your grandparents, we love you. This money isn't for now, it's when you're older, but it's in your name. And we've found out the interest rate we're getting and that's how much we get paid because by the bank for saving the money isn't that good. I'd like you to work with me and open a new account so that we can get you to earn some more money. Let's do it together. That for me is another gift on top of the money. It's a gift of financial education.

• 16:38Speaker 04

  I believe we've got a caller, Chris in Manchester. Are you there?

• 16:43Speaker 05

  Hi, yeah.

• 16:44Speaker 04

  Are you, Chris? What's your question for our man?

• 16:47Speaker 05

  So I've got 10K in my account for our six-year-old daughter. About a hundred quid a month goes in. Want to know what to do for the next 10 to 12 years. Basically do want that. To grow. So by the end of this year, I wanna be in a position where I'm thinking, right, what sort of, you know, where to where to invest it. Um, I know it's wrong in a sense that it's just been sat in my account earning pretty poor interest. Um, so yeah, that's my thing to get it sorted by the end of this year and hopefully for that to continue to grow over the next ten to twelve years.

• 17:31Martin Lewis?

  So let's just start this off. Again, you're saving in your name for your daughter.

• 17:36Speaker 05

  At the moment, yes, but I'm happy. I'm happy for that to change.

• 17:39Martin Lewis?

  Well, I mean, the most important thing I think we need to look at on that basis is the tax. I mean, I don't wanna make you uncomfortable and go into your personal finances detail on the radio otherwise, but do you have other savings for yourself?

• 17:51Speaker 05

  Um, no, not not really. So so from a tax perspective, it's not it's not really.

• 17:58Martin Lewis?

  You're not paying tax on the savings interest?

• 18:00Speaker 05

  No, no.

• 18:01Martin Lewis?

  Okay, I mean, I I sort of as said earlier, your own savings are also important. And what's interesting to note on the tax situation is there is, in fact, I'm gonna I'm gonna do an aside, Naagen. I'm gonna go into how children's tax works and then come back to the question because I think people need to understand this. Okay, so you're both ready to listen to this one?

• 18:21Speaker 05

  Hmm.

• 18:22Martin Lewis?

  Children do pay tax and they are mostly taxed just like adults. Just like adults, the first twelve thousand five hundred and seventy pounds a year they earn from any earnings or work or savings interest is tax free. So is the first three thousand pounds of capital gains they earn profit on any shares if we're talking about investing. So the many people think children don't pay tax. They do pay tax, but the key is most children don't earn over twelve thousand five hundred and seventy pounds a year. And in fact, if they only earn from interest in savings, they'd need to earn over eighteen thousand five hundred and seventy pounds a year of interest

• 19:03Martin Lewis?

  due to what's called the starting savings rates and personal savings allowance, which I'm not going to go into before they paid any tax on it. So it sounds like that's great. You can put money in your kids' accounts and unless you've got an absolute. Enormous amount, hundreds of thousands of pounds, they are not, or they're in the new Harry Potter TV series and they're earning, they are not gonna pay any tax on their savings interest. And then we get to the baboon, the big but. The big but is this is different for under 18s on money given by parents. If a child earns 100 pounds a year of interest from money to them given by a parent or stepparent,

• 19:46Martin Lewis?

  not grandparents, not aunties, not uncles, only parents or stepparents or guardians, then all of it is taxable as if it was the parent's savings. Now, this is done to stop parents stashing their own cash in their child's name and taking it back when they need it and using their child as an extra tax-free allowance. So what does that mean? That means, first of all, if a child is earning over 100 pounds a year of interest from an individual parent and that parent pays tax on savings interest because that parent has used up their personal savings allowance, that's the 1,000 pounds a year that a basic rate taxpayer can save each year without paying tax on it, or they've, you know, not got their

• 20:30Martin Lewis?

  money in an ISA, then you want to protect the child's savings from tax. And the best way to do that is a junior ISA because any money inside a junior ISA is always tax-free. So, I needed to do that aside. Did that make sense? Yeah. Yeah? Yeah. Yeah, so there's two rules. They can save what they like unless it's money given by a parent and then it's a very much stricter rules. Now, in your case, at the moment, tax isn't an issue, but my hope is you'll be saving for your child and saving for yourself and tax may well be an issue in the future. So, when do you want your child to have this money?

• 21:08Speaker 06

  I mean, I don't think she necessarily does need it at 18, but I think my understanding with those junior ISAs is as soon as she turns 18, then then she's got immediate access, was my understanding.

• 21:22Martin Lewis?

  That's right, but with anything else, unless you start going into complicated trusts, then she has access before 18 because it's her money, not yours.

• 21:30Speaker 06

  Yeah.

• 21:31Martin Lewis?

  So that's the first question, and I think the big thing we look at with junior ISAs, are you willing to... Now, this is an interesting one because some people go, no, I want them to have access, and some people go absolutely don't want them to have access. So are you willing to lock this money away to be untouched until your child is 18? What's her name? Can we call her by her name?

• 21:49Speaker 06

  Yeah, Ella.

• 21:50Martin Lewis?

  Until Ella's 18?

• 21:54Speaker 06

  Yeah, we are willing to do that, absolutely.

• 21:58Martin Lewis?

  Then I absolutely think the suitable place for you to put this money is into a junior ISA. Now, remember, a junior ISA isn't something special. I often talk about my cake analogy for ISAs, you know, I may as well do it now. Imagine you've got a chocolate cake and a strawberries cake. Chocolate represents cash because it begins with a C, strawberries represent shares because it begins with a N. We'll take the chocolate cake as an example. You've got your piece of chocolate cake. The problem with the chocolate cake normally is the tax officer can come along and take a bite out of it. All an ISA is, is a piece of cling film. It's a wrapper you can put around your cash, your savings, or your shares, and that way the wrapper's around it, it's still the chocolate cake inside it.

• 22:43Martin Lewis?

  The only difference now, tax officer can't bite it anymore. That's all a junior ISA is. So you still have exactly the same choices in a junior ISA, or mostly the same choices in a junior ISA, that you would have outside a junior ISA. You've got savings junior ISAs, cash ISAs, you've got shares junior ISAs. So really, we're in there. Now, you talked to me about investment, and I think you properly mean investing, not savings, don't you?

• 23:11Speaker 06

  Yeah, so, so, so, so I'm, you know, hopefully, um, you know, money will still be going into that, uh, accounts, but I do, I do, I do want it, I do want it to, I do want it to grow. So, so, so in my head, I was thinking, you know, should you put 10 grand into a junior ISA, you know, should you just pick a couple of funds, uh, should, you know, should you pick one fund, should you pick five funds, that, that, they're the sort of things that I'm thinking of. So I don't just want it stagnating from 2026 onwards like it has been for the past two or three years.

• 23:45Martin Lewis?

  How old is Ella, by the way?

• 23:47Speaker 06

  She's six.

• 23:48Martin Lewis?

  Okay, so, I, I, I think you're completely right, because I focus on savings, people know that, and you can have a junior cash ISA, and absolutely, if you want a junior cash ISA, the top payers are Coventry Building Society, Leake Building Society, NSNI and Tesco Bank, or between three and a half percent and four percent, NSNIs, which is National Savings, is the top payer online. So at least make sure it is in the best paying junior ISA. You can also have a junior cash ISA and a junior shares ISA, as long as you're not putting more than nine thousand pounds in a year. So that's worth noting, by the way. You've got 10 grand, you'd have to put nine thousand pounds in this year and another, and whatever you've got left would go in next year, in the next tax year. So you'd be able to have, by, by the April the 6th, you'd be able to put all your money in there.

• 24:32Martin Lewis?

  I think the, the, the thing to remember is the general investment rule is if you're putting away money for over five years, on the balance of probability, investing will significantly outperform savings. And with a junior ISA, while we're talking about Ella is six, she will be 18 when she can access this money, that's a very long period, which hopefully should mean much greater growth in investments, even more than in the top savings accounts. So putting some of your children's money in there, or all of your child's money, depending on the risk profile you want, because as I say, you can have a cash junior ISA and a shares junior ISA, is absolutely a good thing to do. We need

• 25:12Martin Lewis?

  to do the legal caveat, invest, investing isn't risk-free. You do it in the hopes of far higher growth, but at the risk, you could end up with less than you put in, but you know that, don't you?

• 25:24Speaker 06

  Yeah, I'm I'm I'm just trying to think, for example, putting it into the cash, that's trying to take away all the risk, isn't it?

• 25:31Martin Lewis?

  Yeah.

• 25:32Speaker 06

  And as as as you said, you know, over ten to twelve years, on the balance of probability, it should work out. So in my head, I'm thinking, because that it wouldn't, that we wouldn't put it into the cash, um ISA, because you'd want it in a shares ISA to invest it.

• 25:51Martin Lewis?

  And and I think if you were to go, I mean, you you could go and get investment advice on this, it's probably not really enough unless you're doing investment advice otherwise. And I have to be careful because of the regulations on this, what I can and can't say. So I'm gonna try and phrase what I say carefully. If you were to go and look at an index tracker fund, so a tracker fund is a type of shares fund that tracks the performance of a stock market index, could be FTSE one hundred, could be FTSE two fifty, but there are loads of global ones. And you were to put the money in a global index tracker and a UK tracker and something else, which gives it a huge spread of investments, which diminishes the risk. So, you know, basically, that means if global stock markets go up, yours goes up.

• 26:34Martin Lewis?

  If global stock markets go down, yours go down, which you can do, you know, through Hargreaves Lansdown, A J Bellham, Fidelity on junior ISAs, or you you want, if you're not sure yourself, you could go for a robo-investor, which picks the investments for you with Wealthify and Moneyfarm. I mean, if you were to do that on balance of probabilities over the next twelve years with no guarantees, that's likely to smack the pants off savings. But nobody knows, but it is likely to. And it's certainly, I think, many people, when they're talking about getting junior ISAs, when you've got that such a long time for it to grow without being touched, should be thinking about putting at least some of it in investments.

• 27:09Speaker 06

  Nice one, thanks. Um, so that that was very helpful and, um, you know, I'm not saying I want to go to a Monte Carlo with Ella's cash here, but, um, you know, the tracker.

• 27:19Speaker 04

  Stockport maybe, but not Monte Carlo.

• 27:22Speaker 06

  Um, but the tracker fund, I guess, is still a relatively low risk, isn't it? So I'm just wondering, what would be the, just the next level up from that? So it's not, you know, not crazy risk, but just the next level up from that.

• 27:37Martin Lewis?

  Well, let me say low risk within the world of investing in shares because it has a very widespread of investments. But let's remember there are a lot of different trackers out there. So you could be looking at a global index tracker that tracks, you know, big shares across the world, or an S and P tracker that tracks bigger shares in America, or a FTSE tracker. But you could also go for a smaller, smaller tech stock tracker, yeah, that tracks an index of small company tech stocks with high growth. So all a tracker is, is it's a passive as opposed to an active investment. What that means is that instead of paying a fund manager to pick shares for you, it simply uses a computerized algorithm

• 28:22Martin Lewis?

  to pick shares to match and indices. So the tracker in its own right, you know, it depends what it's tracking. So, and, you know, there's big arguments, active versus passive. I don't particularly want to get into it, but the advantage of a tracker is that the charges are lower. So you tend to keep more of your growth. And unless an active fund with higher charges would have to outperform significantly a passive fund for an order for it to beat it. So I would suggest that you, when you dip your toe in the water, and I can't give you individual funds, I'm sorry, it's a regulated issue. But you look at what you want to track, and you maybe have a mix of different trackers. And certainly, you know, you could track tech stocks. I'm not saying they'll do well, I'm not saying they'll do badly. But because you're

• 29:05Martin Lewis?

  within one sector implicitly, that's a higher risk than tracking a whole broad range of sectors, which is what you'd get in a global index tracker, or a FTSE 2, FTSE 100 tracker. Does that make sense?

• 29:17Speaker 06

  Yeah, yeah. Okay.

• 29:18Martin Lewis?

  And you know, there are lots of good websites, Motley Fool, Triple I, and the platforms like Hargreaves Lansdown that have loads of investment guidance and writing that you can go and read on this. But keep it as a nice broad spread to start, and then gradually learn what you're doing over the years and do it that way.

• 29:36Speaker 06

  Sounds good. Cheers, Chris.

• 29:37Speaker 04

  Thank you very much. Let's go to Becky in Burnwood. What have you got, Becky?

• 29:44Speaker 04

  Hi, I have, my children are inheriting £2,000, and I need to put it into an account that they can't access until they turn 18. So I've been looking at a junior ISA.

• 29:55Speaker 02

  But I was just wondering, is there anything specific I should be looking out for before opening an account, or whether there's a, whether there are any better suppliers or that I could, that I could open an account with?

• 30:08Martin Lewis?

  Well, if you're going for a junior cash ISA, then you are, you're just talking best interest rates. Coventry Building Society's 4%, postal branch only. At the top online is NSNI at 3.55%. So, no brainer, put it where the money is. Remember though, just like any other ISA, if they were to drop the rates in future and no longer be good, you have a right to move it to another junior ISA. You can't take the money out, but what you do is, and just for anyone who's got a junior ISA that's not paying good rates, is you go to a new junior ISA provider, you fill its application form. On the application form, there's a transfer section and you just apply to transfer the money across. So, don't see it as a done deal. But the big question, a bit like our last caller, is are you thinking savings or are you thinking investing?

• 30:55Speaker 02

  It's, it's only £2,000, so I would assume just saving.

• 31:00Martin Lewis?

  Well, you could argue it the other way around, to be honest. It's only £2,000, so you could take a risk on it and invest it and hope it grows quicker. You could have half, you could do half and half. You could put half of it in a junior cash ISA and half of it in a junior investment ISA. If you're, it sounds to me like you're a little less keen on investment, a little less sure. One option to look at, I can't recommend it, but one option to look at is the robo-investing. I don't, have you heard of that?

• 31:24Speaker 02

  No.

• 31:25Martin Lewis?

  So, robo-investing are basically app-based platforms and they're growing, where you give it your money, you give it your risk profile that you want, and it selects a range of investments for you. It's basically for novice investors who aren't sure and don't have the confidence of what they're doing. And so you might, I'm not suggesting it's right for you, but you might want to have a look at something like, I mentioned them before, Aviva has got one called Wealthify, that's one of the options out there, or Money Farm has another one, if you're, if you're less secure, because you might find that, I'm not saying it's better, but you might find it easier certainly to do. Or alternatively, just put the money in the top paying junior cash ISA. There's not really that much to watch for. You're putting the money away and you can't touch it till they're 18.

• 32:10Speaker 04

  Okay.

• 32:11Martin Lewis?

  Wish you best of luck with it.

• 32:12Speaker 04

  Cheers Becky, thank you very much. Thank you, thank you for your help. Becky in Burnwood, and be more kids questions in the podcast.

• 32:20Martin Lewis?

  Yeah, I want to go into child trust funds, what you do with those and what you do when junior ISAs and child trust funds matures. I want to talk about children's pensions, I've got loads more. I shall be popping that all in the podcast. And if you're listening on the podcast, that means just wait a bit and it'll be coming in a while.

• 32:37Martin Lewis?

  In the news break in the programme, there was a story about lifetime ISAs and how the Treasury Committee was criticising the government for not having done enough. Unsurprisingly, because I was there, Adrian asked me about it.

• 32:52Speaker 04

  We just heard about lifetime ISAs, LISA, LISAs, I can't remember what we call them. So what's going on?

• 32:59Martin Lewis?

  Well, yeah, so there was a parliamentary committee, the Treasury Committee looked at evidence into lifetime ISAs. I gave evidence to that committee, I should state. And in my view, ISAs are a brilliant, brittle and broken product. And they are broken in many ways. I mean, we start with the basics. A lifetime ISA is a product you can open aged 18 to 39. And then when you're saving it, you can put up to four grand a year in. If you use it to buy a qualifying first time property, you get a bonus of 25%. So that's a thousand pounds a year, free money, or state funded money that you get towards your first time deposit. And used, if it works for you, it's unbeatable and brilliant. The real

• 33:44Martin Lewis?

  problem on the housing element is you have to be buying a property under £450,000, which is fine for most of the country, but people in the south east of England struggle. And the really big problem is if you take the money out to use for a property, and it isn't a qualifying property, let's say it's £451,000, you have to pay a fine to the government, a fine effectively of 6.25% of your money. So you've saved 10 grand, they want 625 quid, you don't get back all your money. Never mind, you don't get the bonus. Now, I think that is a perverse incentive, it puts people off from saving in the first Even people it wouldn't affect because they are scared of that withdrawal penalty. And my argument is that what should happen is if you're buying a property, either you get the bonus

• 34:30Martin Lewis?

  or you effectively don't get a penalty, you can take your money out if it's being used to awards a first time property. Taking it out for other reasons, then they can charge the penalty because it was meant to be that. The Treasury Committee is also looking at the other end of this, which is a lifetime ISA can be used to save for retirement. The problem is very few providers offer it because they're scared of being done for mis-selling. Because for most people who are in an auto enrolment scheme, employees at their workplace, they would be better off putting money in the pension, which is why you'll find that very few big high street banks, in fact, no big high street banks through their main offerings, offer a lifetime ISA. There's a secondary problem too, that if you're saving for it towards your retirement,

• 35:13Martin Lewis?

  then unlike pension saving that doesn't count towards as savings on universal credit, LISA savings does. So say using a lifetime ISA to save your retirement as it's designed to could reduce your universal credit entitlement. That's why I say it's brilliant for those who it works for, brittle because it's for using for two different things and it breaks in the middle, people use it for their house buying and then it stops, they don't use it for their retirement savings because most of them shouldn't, and broken because some of the rules simply don't stack up. That report went to the government and the government responded and went, hang on, hang on, well, wait a minute, hang on. And said nothing, said nothing. And there is an opportunity in the budget for it to be fixed.

• 35:55Martin Lewis?

  I had a promise from Jeremy Hunt, he would look at it two budgets ago in the next budget, but then he didn't get elected again. And I haven't heard anything from Rachel Reeves on it, although I have written to her about it in the past. So for all those young people who are getting lifetime ISAs, you just have to make sure you understand it. It could be really lucrative. I've had so many people who've had thousands of pounds of money on a lot back on the lifetime ISA. You know, two of them have saved together for three or four years and they've got three or four thousand pounds each towards their first time deposit rate. I've also had loads of complaints for people who've been absolutely stuffed by it. And it seems to me if we're going to have a product like that, we should make sure it's working.

• 36:34Speaker 04

  Shall we do some tellers?

• 36:36Martin Lewis?

  Let's do some tellers indeed. This week's tellers. What moment in your life did you feel the richest, even if you weren't? So you're, what was it? Why don't you start, Adrian? We'll alternate them. They're in a specific order this week.

• 36:49Speaker 04

  I've got it, don't worry.

• 36:50Martin Lewis?

  It's in capitals, I'm in front of you.

• 36:51Speaker 04

  I've got the memo. Kristy says when she got her redundancy payment, "The following week I used it to pay off what was left of my mortgage after years of struggling."

• 37:01Martin Lewis?

  Mortgage-free day is such an important moment in many people's lives. That burden of that regular payment disappearing. I can understand why that makes you feel rich. Lydia. "The 26th of September 2011, the day my first ever student loan payment dropped in my bank. After working Saturday and holiday jobs to three to five quid per hour in my teens, suddenly seeing £2,800 in my account made me feel like a millionaire."

• 37:28Speaker 04

  But there's a but there, isn't there?

• 37:30Martin Lewis?

  I tell you what, the but is probably me reading it thinking.

• 37:36Martin Lewis?

  You know, we educate our youth into what we call debt when they go to university. But we still don't properly educate them about debt. You know, financial education's on the national curriculum, but less than 50% of schools teach it because they don't have to. I've met the head of the new curriculum review on that, and I'm hoping there will be a change on that next year. Universities do student loans but don't take the custodial care I would like to by properly explaining, on the all of them anyway, how student finance works. So here we are, plonking someone who's been earning £3 to £5 an hour, suddenly giving them £2,800, bang in one go, at the age of 18. And yet have we ever taught them how to manage it responsibly? Have we ever taught them when you're a student? Here we go, Adrian, a question for you.

• 38:20Martin Lewis?

  When you're a working person, you shouldn't spend more than you earn. When you're a student, you shouldn't spend more than...

• 38:29Speaker 04

  And you borrowed?

• 38:30Martin Lewis?

  Well, you see what I mean? Suddenly, you know, lots of parents and they, oh, you gotta bu- you gotta do, gotta budget, gotta budget, gotta budget. But, but we don't tell them how to budget. So if you're asking me, I would say it should be any money that you've got from grants and loans, plus any money that you've got from working, plus any money that you've got from parents, but it should not include your 0% overdraft that you get on your student bank account. You should not count it as buy now, pay later, or any other form of debt. And without that sort of education and demarcation of how to operate, they make mistakes. So that was, that was the but. It was my but, not Lydia's but.

• 39:06Speaker 04

  Well, yes, and we, we don't want to come across as commodinally to Lydia, who like the sight of that 2,800,000 in a bank account. She's obviously well aware, it is a loan, but we, we, we get it.

• 39:16Martin Lewis?

  What've you got?

• 39:17Speaker 04

  Uh, Luke, I think that's yours next.

• 39:19Martin Lewis?

  Stop, Luke, and listen, no, you have Luke, it's fine.

• 39:21Speaker 04

  Okay. Second year working as a junior doctor. Picked up the Asda basics cheggah and then thought, nah, I'm on the Cathedral City now. Steady on, steady on, Luke.

• 39:33Martin Lewis?

  And that's it, you go for it.

• 39:34Speaker 04

  You'll be going for Artis and Cheezers before you know where you are.

• 39:37Martin Lewis?

  You might go for extra mature at some point, you never know. Yeah, that, that's you, Adrian. Uh, Tom simply says, the day before buying a house, that's when he felt rich.

• 39:47Speaker 04

  Hmm.

• 39:48Martin Lewis?

  Uh, uh, that's an interesting one for me again, that one, you know? Because that's, uh, that's what I call a swap of asset class.

• 39:56Speaker 04

  Yeah.

• 39:56Martin Lewis?

  And, and, uh, people don't, I'm gonna get personal and say something I'd hope. When I sold my website, which I should state, I still run, I'm executive chair, I still go in, I still write and do all that stuff, but it was a long time ago now. People say, said to me, you know, oh, you've suddenly got all this money, what's it like to be rich? And, and in my case, I think it's probably fair to say, yes, rich is, is the right adjective.

• 40:19Martin Lewis?

  In my head, I'd already been earning a decent whack and I had just de-risked and transferred a very valuable asset that I had, which is the website, into more liquid assets, which was cash and shares. It was a transfer of assets rather than the sudden manifest change in my financial status. I'd owned it beforehand. I'd owned that valuable asset. It's like when you sell a house. Suddenly you have cash, but before you had a house. It doesn't actually mean, but it's incredible, the psychological difference that makes it. Not for, I think probably my issue is I overthink it. So I was thinking, well, it doesn't actually make such a psychological difference, but I can see it does for many people.

• 40:57Speaker 04

  But also, you accrue, you know, you've, you've, you've, you've taken on a huge debt, which I think is the point. I bet there was a very, very well.

• 41:06Martin Lewis?

  There is, there is. We don't know, but, but he's taken on a huge debt, but he's got an asset that's worth more than your huge debt. So his net, his net assets are the same. You know, let's say he had £20,000 in savings. He's now got £20,000 invested inside a house. So he's cash poor. And, and, and so my point isn't that Tom shouldn't feel like that. Of course Tom should have felt rich like that. Of course he should, he should have enjoyed that. But the point is that actually we need to holistically think about our, our finances and it isn't cash in the bank. Cash in the bank is not the only thing that you have. We have assets too, or hopefully if you're lucky.

• 41:39Speaker 04

  Okay. Do you want to do Ruth?

• 41:41Martin Lewis?

  Well, you do Ruth.

• 41:42Speaker 04

  I'll do Ruth. When I called the number on the letter to double check, I'd read the PPI payout letter correctly. Thanks to you and your letter templates, I got more than 40K back, 21K in one large payment from Yorkshire Bank. I just got a loan for a van, so I paid it straight off and no debt since. And you do Aoife. I love this.

• 41:59Martin Lewis?

  I love it. I love it. I'm so pleased to hear that Ruth. I'm so pleased I managed to help. Aoife was in the choir when I was younger, was unaware that you got £2.50 per service you performed at. As a child who received no pocket money, when they presented my first pay packet after the first three months, I had never felt so rich.

• 42:18Speaker 04

  Beautiful.

• 42:19Martin Lewis?

  And subsequently spent it all on birthday gifts for my mama.

• 42:22Speaker 04

  Oh, that's so nice. I can imagine her singing so sweetly and not knowing, not even knowing she was getting two and a half quid for the trouble.

• 42:31Martin Lewis?

  And let's, let's do Adam as our last one. I'll do a few more in the pod.

• 42:34Speaker 04

  Okay, my first pay as a sixteen year old in the early two thousands, just over a grand, I was able to buy myself a Sony Mini Displayer and a Sony thirty-two inch flatscreen CRT TV and still have five hundred pounds left over. Those were the days.

• 42:51Martin Lewis?

  They were. Do you know what that makes me think? I'm sorry, I'm being all serious on some of these when they're meant to be just joyous.

• 42:56Speaker 04

  Yeah.

• 42:57Martin Lewis?

  So at the moment, in this country, auto enrolment for pensions, and the earlier you're saving your pension, the more time it has to compound and to grow, starts for people who earn over ten thousand pounds once they're aged twenty-two. Now, a couple of years ago, the government actually passed a bill that said they could lower the age that auto enrolment starts, but it hasn't been done. And I sit there and think, if you've got an eighteen year old, this was sixteen, but you've got an eighteen year old in work, a bit like Adam, sitting at home with no cost because it's all being paid by their parents, that's one of the times in relative terms, they will have the most disposable income. So it would be a perfect time to auto-enroll them in a pension, which means that their employer is having to contribute to their pension as well as

• 43:38Martin Lewis?

  them. And it seems silly to me that if someone's earning over ten thousand grand, grand, grand and they're aged eighteen, that's almost the best time to have them contributing to a pension because they tend, and lots of people's lives are different at eighteen, but they tend to have a lot of disposable income. That's what Adam made me think of, but that's why I'm a, I do money saving rather than just enjoying the joy of things.

• 44:00Martin Lewis?

  Play the theme tune.

• 44:07Martin Lewis?

  Yes, welcome to Money Mastermind. The score currently is Adrian has got eleven right and twenty-one wrong. If you've got twenty-two wrong, that would have been random chance, so he is fractioning ahead of random chance. Well done, my friend. Now, it is all about borrowing today, Adrian, the question, and regular listeners will know that you are the type of man who diligently thinks, I'm not going to buy a book on how to avoid debt, I'll borrow it, but then forgets to return it for two years and gets a huge fine. So no surprise, the only credit Adrian gets from me is for admitting his ignorance. We want to turn it around though, Adrian. It's not the best setup today, I'm not that pleased. We want to turn it around though, Adrian, with you surprising everyone and getting this week's mastermind right. So here is the question. Adrian, when you or anyone else

• 44:52Martin Lewis?

  applies for a personal loan.

• 44:55Martin Lewis?

  And what percentage usually of accepted applicants must get the advertised rate? A, all of them, B, sixty-six percent or more, or C, fifty-one percent or more? So when you see a personal loan advertised in a standard personal loan, what percentage of accepted applicants must get the rate that they're advertising? All of them, sixty-six percent plus, fifty-one percent plus?

• 45:24Speaker 04

  You'll tell me this isn't relevant, but it strikes me that it ought to be. If they're not, I mean, the headline rate you're being offered might be one thing, but if there's an asterisk next to it and it says stuff underneath, doesn't that change things?

• 45:38Martin Lewis?

  Okay, so I think that's a fair, I'm gonna have to help you here because I think that's a fair point. And I don't like doing this, but I will. So when you, what you see, when you see a loan, is it will say nine point two percent representative APR.

• 46:00Martin Lewis?

  There will be no asterisks, it will say representative APR. It might be small print at the bottom, but that's what it'll say.

• 46:06Speaker 04

  What percentage? And it was every accepted applicant?

• 46:10Martin Lewis?

  Sixty-six percent plus or fifty-one percent plus?

• 46:15Speaker 04

  I think, I think it is only fifty, only, well, I suspect it is only, it is fifty, fifty, if it's more than half have got to get it. But with these, I try and see, not to be cynical, see the world as it should be, not how it probably is, so I'm gonna go for A.

• 46:41Martin Lewis?

  You're gonna go for all of them?

• 46:42Speaker 04

  Everyone's accepted. If you applied for something where it says nine point six percent APR, you apply for it, you're accepted, you're entitled to expect to get that nine point six percent. And so I'm going all of them. That's what the law should be, even if it isn't.

• 46:56Martin Lewis?

  Well, let's just do the, uh, straight away. I mean, I gave you- I don't care. I, I, I, this is, I want it. I like, I like your rose tinted financial spectacles. I gave you the clue in the word representative rate. Now representative rate indicates it's not going to be the rate that everyone gets. Representative rate says fifty one percent or more of accepted applicants must get the advertised rate. The rest can be charged more and they can be charged more without limit, which is one of the great problems. And the real issues with personal loan applications is you can apply for a loan at ten percent and then be accepted for a loan at eighteen percent. You may not want the loan at eighteen percent and now you want to apply elsewhere.

• 47:38Martin Lewis?

  But the fact that you have applied for the loan at ten percent is now on your credit file. And each extra application is marginally negative. So that could make it slightly more difficult to get a cheaper loan. And they, even though they've accepted you for a loan at a far higher rate than the one that you applied for. The whole system is anti-shopping around. And what makes this worse is this rule only came into place on the first of February two thousand and eleven. Before two thousand and eleven, we, the rule was you would have seen a nine point eight percent typical APR. And a typical APR meant that sixty six percent or more people, that was option B, needed to get the, the advertised rate.

• 48:22Martin Lewis?

  But due to homogenization with the EU, and I don't want to get into good or bad, but this was one of the rules that was bad for the country. We homogenized down, which I don't think legally we needed to. And there was a big discussion about that at the time, but I'm not going to re-litigate arguments I was having back in two thousand and ten, to fifty one percent. Now, we're now out of the EU and I would like to see one of those things for being out of the EU is we are now free to go back to typical rates. Where two thirds, and I have written to the FCA and the government on this one, where two thirds of accepted customers should get the advertised rate, not fifty one percent. But you need to be warned, unless you're on an eligibility checker, which can give you guaranteed rates by doing a soft credit score on you.

• 49:02Martin Lewis?

  When you apply for a loan rate, the loan rate you're seeing, if it has the word representative, which pretty much all- All of them do. Representative is the key word. Then you are not guaranteed to get the advertised rate. There is no limit on the rate you can get. They tend not to go too high, to be honest. But there's no limit on the rate that you can get. And if you don't want that loan, having already applied for it, then it's already been slightly negative to you on your credit score. Which just seems to me a very unfair system. But I've been campaigning about it since before it was a typical rate. And nothing has changed yet, I'm afraid to say.

• 49:35Speaker 04

  Okay, shall we do one last tell us?

• 49:36Martin Lewis?

  Go on.

• 49:37Speaker 04

  Before we go. I like this case. I got a 5K inheritance when I was 19. It was the most money I'd ever seen at that point and I lived like a queen for the whole summer. All the things I do with that 5K, now I'm an adult with real adult things to pay for.

• 49:52Martin Lewis?

  Well, you probably wouldn't have anywhere near as much fun, would you?

• 49:55Speaker 04

  No, but you've got to buy a, I don't know, a trellis, some garden furniture, a sofa. It was stuff that subconsciously I thought the government supplied when I was a kid. I didn't realise you have to spend money on these kind of necessities.

• 50:09Martin Lewis?

  Buy yourself a Van de Graaff generator. That's my top tip.

• 50:12Speaker 04

  Okay, that's random?

• 50:14Martin Lewis?

  It is random. I will explain why in the pod.

• 50:18Speaker 04

  Okay.

• 50:18Martin Lewis?

  Take care. And by the magic of podcasting, we're now in the podcast, so I can explain to you what I was talking about. And why I randomly mentioned a Van de Graaff generator. So it sort of follows the theme on when did you first feel rich? When, when I sold Money Saving Expert.

• 50:35Martin Lewis?

  What the newspapers kept asking me is, what have you splurged on? What you've splashed out on? And that's just not my nature. It's not the way I work. I don't do impulse buys. It wasn't something I was, I was thinking about. But I got so fed up of being asked the question and not having an answer. I sat there and thought, what have I always sort of wanted, not really, never actually bought myself? But would be totally random and I'm interested in. And I bought myself two things off eBay. I bought myself a wind-up Van de Graaff generator. Yeah, that's the thing you did in physics class, which creates static electricity and you put your hands on it. It gives you a little electric shock and your hair goes up. Not that I have enough hair to do it with anymore. And I bought myself a theremin, which is the electronic musical instrument that the Star Trek theme is done on.

• 51:22Martin Lewis?

  And they both cost in total less than a hundred quid. But they were the two things that I bought, so I had an interesting answer to the question, what did you splurge on? There we go. What did you reckon to that, podcast producer Matt?

• 51:36Speaker 07

  I'm just wondering why you went for the, what's that, ther- theram?

• 51:40Martin Lewis?

  Theremin.

• 51:41Speaker 07

  Theremin?

• 51:41Martin Lewis?

  Because I'd always, I'd always heard about a theremin and I didn't really know what it was. And I looked it up and there was one on sale very cheaply. And I've never really been able to play it, but it was, it is quite a cool. I mean, both these things are serious geekdom. And, and I'm not embarrassed to live in a geekdom world.

• 51:59Speaker 07

  Well, I can just imagine you now with both of your hands going, trying to get that cool sound.

• 52:03Martin Lewis?

  Yeah, my Van de Graaff generator's static belt's not as good as it was. It can still make a spark, but you can't make your hair stand on end anymore. And it sits behind me in my office in MSC Towers these days. It's just there as a little bit of an oddity. It's quite a nice ornament though.

• 52:17Speaker 07

  Yeah, they're pretty cool.

• 52:18Martin Lewis?

  Yep. Right, we should go, we have loads more children's savings questions. I know you've got a pile for me, so why don't we get on with them?

• 52:23Speaker 07

  We did. Let's start with Sharon. She says, my son has a child trust fund. He turns 16 next year. What are the best options to talk with him about what to do with the money when he turns 18? Hopefully other than just spend it.

• 52:37Martin Lewis?

  Well, I'd actually argue there are things to talk to him about now, rather than just when he gets to 18. So what is a child trust fund? And actually, there are many people who have these and don't know about that. I'll come on to that in a moment. If your child was born between the 1st of September 2002 to the 2nd of January 2011, they would automatically have had a child trust fund. Now, a child trust fund is just the tax-free predecessor to the junior ISA. I mean, it is these days in all but name, a junior ISA. You can put up to nine thousand pounds a year in it. It's tax-free, you can't access it until the child is 18. However, there is one big difference. With child trust funds, unlike junior ISAs,

• 53:20Martin Lewis?

  the state paid in 250 quid to start them off. 500 pounds for some in lower income families. So even if parents, grandparents and others didn't put anything in, every child of that age has some money in a child trust fund. And many have lost track of it, which we'll talk about in a moment. But let's get on with Sharon's question. So first of all, why am I saying you should talk about it now? Well, Child trust funds are a dead product. You can't get a new child trust fund. And because of that, that means the market is not particularly competitive. The best child trust fund savings do not pay as much as the best junior ISAs. And financial advisers tell me the choice of investments within child trust funds is not as

• 54:02Martin Lewis?

  good as the choice of investments within junior investment ISAs. So if you have a child trust fund, for many people, there are some caveats in investment that you might have something specific that you want, but certainly in cash, you do not want it. You want it to be a junior ISA. And you can convert a child trust fund into a junior ISA. Same process as I mentioned before. You apply for the new junior ISA. And then within that, you fill out the transfer form and you put your child trust fund details and your child trust fund money would be moved into a junior ISA. So now you have a junior ISA and you can earn more interest. Or if you're doing it for investments, you get more investment choice. So I wouldn't wait until your son was 18. I would be looking now at trying to maximise it.

• 54:45Martin Lewis?

  But as for the what you do when you're 18, well, of course, there's a lot of choice. The thing to remember, when your child trust fund or junior ISA matures, it will automatically be converted at the age of 18 into an adult ISA equivalent. What do I mean by that? A junior cash ISA becomes a cash ISA. A junior investment ISA becomes an investment ISA.

• 55:12Martin Lewis?

  But it may well be in a pants cash ISA or a pants investment ISA because it's just going to move to the default. And at the very bare minimum, you should be making an active choice to move it into the best product of its type. So if it's a cash ISA, you want the best rate cash ISA. And again, you have a right to transfer it, exactly as I've talked about. You just apply to a new provider and ask it to transfer the cash ISA across. Equally,

• 55:37Martin Lewis?

  He might want to take some money out when he's 18. Equally, he might want to start saving into a lifetime ISA, which I've already mentioned earlier in the show. If he's going to be buying a property at some point under £450,000. Because within a lifetime ISA, for every pound you save, as long as you're using it to a qualifying first property, you get an extra 25p added, up to a maximum of £1,000 a year. So, you know, if he has any debts, he should be using it to repay those, but I suspect he doesn't. So they would be your main choices. It depends what this cash is there philosophically for. Is it there to buy something specific? Did you save it to help him towards his university costs? If he's going to go to university, is it there towards a property? I don't know, and you may not know,

• 56:20Martin Lewis?

  but I think they would be the sphere of conversation that I would be having. Is which of those things is the best to do? Hopefully that covers it. Oh, oh, oh, yes. I said about lost child trust funds, and I should talk about that for a second, not for this particular case. So, official stats show over 700,000 young people may have a child trust fund and either aren't aware of it or don't know where it is. The average balance is £2,200, though that will vary hugely with the age, whether it was an investment, whether any money was added. If you don't know your child trust fund provider, then there's a free tool via gov.uk to help you find it.

• 57:04Martin Lewis?

  It's totally free, do not pay anyone. Some people advertise to try and tack these down. You don't need to do it, just go to gov.uk. If for an under 18, the parent can do it. For someone 16 or over, the child can do it. You will need your national insurance. So yes, that does mean if they're between 16 and 18, it's a choice of whether the child does it for themselves or the parent does it for them. You should get a response from HMRC within three weeks telling you which provider has your cash, and you can then contact that provider. Obviously, if you know your provider already, you contact it directly. I'm just going to read you a little success story on this, because so many people have lost touch with the money that they've got. Delightfully, Kirsty emailed me to say, "As an adoptive family, we didn't know anything about child trust funds

• 57:48Martin Lewis?

  until I read your info on it. I followed the advice, I was informed where the funds were originally set up, and we found both funds were valued at about £1,000 each. Thank you so much for raising our awareness."

• 58:03Martin Lewis?

  I think that's a rather nice way to move on to the next question, Matt. I agree. Martin, you're talking about savings. What should you get if your kids want to spend money on a debit card? Yeah, it is interesting because we have focused mainly on the savings, but there are children's bank accounts as well which are worth looking at.

• 58:20Martin Lewis?

  And there are also special children's spending cards, prepayment cards. So let's just run through those. And it is a choice in many ways between the two. So children's bank accounts, in those, they have money in. They can spend on a debit card, just like some adults' accounts. The pros of that is there are no fees, as long as you pick the right one. You may get some interest on money kept in there, and all your money in there is fully protected. The cons is unlike the prepaid cards that I'm going to come on to in a moment, they don't have parental controls and parental monitoring services. And they're also often only available for over 11s. So my top picks would probably be the Santander 123 account, which via some routes at the moment can give you a £15 signup bonus and up to 3% interest.

• 59:05Martin Lewis?

  The 3% interest is only if you've got between £1,500 and £2,000 in it. Don't put over £2,000 in it because you don't get any interest on amounts over £2,000. The competitor is the Nationwide Flex One that pays 2% interest on up to £1,000 and has a linked savings account paying 5% on up to £5,000. Both of those will give you a debit card. There are others out there. Those are my two top picks at the moment. But they do tend to have age restrictions on who can get it, as generally over 11s. The alternative are prepaid cards, where you load money onto the card that you want to spend. Loads of spending controls for parents here and are available for younger children. But there's no interest, some of them are expensive,

• 59:46Martin Lewis?

  and the protection on your money is lesser e-savings protection. So don't keep too much money in there. So my top pick is probably the Hyperjar card for age 6 to 17, although you can't withdraw money from a cash machine on this. It's only for spending on the card. The only real cost is a £5 fee to have the card delivered. After that, it's free unless you start using it in unusual ways, such as you do over 11 top-ups in a month or you're withdrawing to other bank accounts frequently. It's generally free.

• 1:00:18Martin Lewis?

  Better are card, the Starling Kite, the NatWest Rooster and Revolut. But those are only if the parent has an account with those banks anyway. Or Revolut is a financial service provider. So they are slightly cheaper than Hyperjar, but you need to be a customer already. I mean, I should note with Hyperjar, to get it, the adult has to sign up for a free virtual card. But that's just a nothing thing, rather than actually getting a main account. The best known one out there, the best known of these prepaid cards is the GoHenry card for ages six to 18. It's got a £4 monthly fee though, though it does have extra financial education tools compared to some of the others. Although the others are pretty good. Personally, I'd probably go for the free one. I say I probably would, I have, I've gone for a free card in the one that I use with my daughter.

• 1:01:03Martin Lewis?

  But it is a choice of what you tend to use. And all of those in our modern digital age, you know, giving kids pocket money these days. If they're going to be buying stuff online, it doesn't really help them. So the prepaid card give you the controls and the bank accounts are free. Thank you very much. That answers my question. Right. Have you got any more? I do. I've got one from Alan. He is asking, can you discuss? Discuss? Discuss? He is asking, can you? Yes. This is Sean Connolly here on Martin Moore's podcast. We can discuss, but what do you want us to discuss? Pension options. He wants to discuss. Discuss. Matt, you are, you are the producer. No, no, Matt, you're the producer of this podcast. You are not allowed to edit this out.

• 1:01:48Martin Lewis?

  This has to stay in, okay? I can't guarantee that this is going to stay in because this is embarrassing. I can't say the word pension. You have to keep it in. I want you to discuss. There is no discussion, you're keeping it in. Let's go and give me your question. Alan, can you discuss pension options for children also? Tax relief, amounts that can be invested, providers.

• 1:02:12Martin Lewis?

  I certainly can. I mean, for those of people who are lucky enough to have spare cash, that you've, you know, you've got children's savings, you've matched out your kids' junior ISAs, then starting a pension for your child is worth considering. It also, I think, makes a great gift from grandparents. So a newborn now may remember how you helped them in over half a century's time when they're retiring. Now, you might be thinking, well, hold on, isn't pensions all about tax relief? Yes, it is. It's all about tax relief. But pension rules allow even those who don't earn anything of any age to get the equivalent of 20% tax relief. In other words, for every £80 saved in a child's pension, the pension firm automatically tops it up for the state with what's called relief at source. So your child's pension

• 1:02:57Martin Lewis?

  will have £100 in it for every £80 you saved. The maximum you can put away if your child doesn't earn anything, which almost none of them will earn over the big threshold that they would need, is £2,880 a year, meaning they get £3,600 in their pension. That money will be locked away until they're aged at least 57, based on current rules, but my suspicion is, once children now are retiring, it will probably be even older than age 57. But, just as I talked about compound interest on investments earlier, the same is true of a pension. The longer you have money in there, the more time it has for it to grow, the more time it has for it to compound, the more powerful it is. So putting money in a pension early, again, in my priorities order, look after

• 1:03:42Martin Lewis?

  your family finances first, then to start to put some directly usable savings away for your kids in children's savings accounts or junior ISA, and this is the luxury one if you can on the end. You know, this is not the must do, this is the luxury one. Then, I think putting some money in pension savings for your kids is a really decent option. Simplest route is a stakeholder pension. So Aviva Standard Life offers stakeholder pensions out there, or if you want to be more sophisticated, go and look in some of the self-invested personal pension options with some of the providers I mentioned earlier when I was talking investments. But yeah, putting money away for your kid's pension, not a bad thing to do. Martin, lots of people are asking about premium bonds. For kids, is that a good idea?

• 1:04:24Martin Lewis?

  Yeah, look, it's incredibly common. Many people, often grandparents, gift premium bonds to children. In my view, being blunt, I think they would have been better sticking with normal savings. So, a quick premise: premium bonds are government-backed savings where the interest is based on a prize draw. The current prize fund rate is 3.6%. Yet, that overestimates what someone with typical luck would get. Because for everyone who wins a big prize, lots of people have to win less. So actually, most people with typical luck will win less than 3.6%. And the top savings rates we're hearing for kids are up in the 5%-ish range. Now, when I'm talking about premium bonds for adults, I normally say premium bonds are best if you fulfil the following two things.

• 1:05:09Martin Lewis?

  First, that you have larger savings, say over £5,000, because then you have a better chance of winning closer to the published prize fund rate, 3.6%. If you have less than that, the odds are you will win little or nothing. And second, they're best for those who pay tax on their savings interest, because they've used up their ISA allowances or personal savings allowance. And in that way, because premium bond winnings are always tax-free, they're useful. So now we look at that for kids. Well, most children don't pay tax on savings, and most children only have small amount in premium bonds. In which case, premium bonds will, with typical luck, be pants.

• 1:05:48Martin Lewis?

  Now, yes, there's the ludicrously small chance that you might win the million, but I mean, really, you're talking about similar levels to tossing a coin and it landing on its edge. I mean, that's the sort of scale we're talking about. So if you are thinking of putting money in premium bonds for children, and say it's £1,000 or less, I think the stark fact that's worth knowing is if you put £1,000 or less into premium bonds, over a year, with typical luck, you will win nothing. Technical note, for those of you wondering what typical luck means, I define it as what the person with the median average winnings for that amount of money would be, as dictated by... Well, I can, there's no way to say this without mentioning it.

• 1:06:33Martin Lewis?

  The premium bond probability calculator that I had built years ago. So typical luck is defined as the median average. In other words, you line everybody up with that amount of premium bonds. And it's the amount that the person in the middle would win. Seems quite a good way to finish this segment. Thank you for all of your questions on children's savings. Hopefully we've given you big answers to those ickle saving problems.

• 1:06:59Martin Lewis?

  That's it for this week. If you've enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast. And why not subscribe? We tend to put out a new pod every Thursday. And then there's a new question time pod coming out on a Monday, too. Your pockets may well be pleased with you. If you've not enjoyed it.

• 1:07:32Speaker 02

  Martin Lewis is the founder of moneysavingexpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing [email protected]. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

• 1:08:12Speaker 00

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• 1:09:27Speaker 06

  Welcome to the Haunted Library. Join me, Colin Morgan, as I read Frankenstein by Mary Shelley.

• 1:09:37Speaker 06

  A story of science and ambition, loneliness and longing, and what it truly means to be human.

• 1:09:47Speaker 06

  Listen to the Haunted Library wherever you get your podcasts or find us on YouTube.