Buying NS&I Premium Bonds for a youngster is a fantastic idea because it’s a gift that keeps on giving (possibly).
Premium Bonds can be purchased on behalf of a kid by anybody over the age of 16, thus aunts, uncles, and even family acquaintances can participate.
Furthermore, NS&I’s decision in 2019 to reduce the minimum investment amount from £100 to £25 makes them a considerably more practical, or inexpensive, gift.
Instead, how about purchasing bonds for yourself? The following are the simplest methods for purchasing Premium Bonds.
How to buy Premium Bonds for your child
Parents and legal guardians can apply online, over the phone, or by mail to purchase Premium Bonds as a gift for their children.
Whether you’re buying for the first time or adding to your collection of Premium Bonds, you’ll need to be registered with NS&I.
As previously stated, you must invest at least £25 in Premium Bonds, with each £1 producing one unique bond number.
Every number has an equal chance of winning a prize, so buying more increases your chances of winning.
Until your child turns 16, you will receive confirmation of transactions, money for bonds cashed in, and rewards won.
Do you want to know whether you’ve won anything? The most recent results can be seen in this article.
Buying Premium Bonds for someone else’s child
If you want to spoil your grandchild, niece, nephew, or even a family friend’s child, you can apply online or by mail for an electronic or paper gift card to give to the child.
Your investment will be acknowledged, but only the chosen parent or guardian will be able to manage and cash in the bonds.
Before purchasing Premium Bonds for someone else’s child, there are a few things to consider.
Of course, you’ll want to make sure the parent or guardian is okay with you sending over their information and that they’re happy to look after the bonds.
These facts include the child’s and parent’s or guardian’s dates of birth and addresses, as well as the child’s Premium Bonds holder’s number (if they have one).
Everyone on the application will have their identity and address checked by NS&I, therefore there’s a risk that documentation will be required.
To avoid any unpleasant shocks, inform the parent or guardian that NS&I may contact them to request documentation to establish their identity.
Premium Bonds are detailed in detail, including how to purchase them, how to cash them in, when winners are revealed, and more.
How long does the process take?
If you’re buying the bonds as a present for someone special, you’ll need to prepare ahead and apply ahead of time.
NS&I hopes to open new accounts in seven to ten working days, but because everyone’s name and address on the application form must be validated, it will most likely take longer.
What happens if the child wins?
If the child outperforms the odds and wins a prize, the parent or guardian will have to decide what to do with it.
There’s no need to be concerned about tax implications. While a child cannot earn more than £100 in interest per year from savings, this does not apply to Premium Bonds winnings because they are rewards.
Finally, make sure the child’s information is up to date: there are millions of pounds in unclaimed awards held by bondholders under the age of 16.
Can I purchase Premium Bonds for my grandson on the internet?
Grandparents can purchase premium bonds for their grandkids just as they can for themselves.
They can purchase them online, over the phone, or by mail, but they must first register with NS&I.
Once grandparents have created an account, they will be responsible for it until their grandchild reaches the age of 16.
Is it possible to purchase Premium Bonds in my grandchild’s name?
Premium Bonds can be purchased by anyone who is 16 years old or older. On behalf of their kid or grandchild under the age of 16, parents, legal guardians, and (great) grandparents can invest.
No interest is paid on Premium Bonds. Instead, your Bonds will be entered into a monthly prize draw to win tax-free gifts.
Premium Bonds – the prize draw
Every month, almost two million awards are distributed to lucky Bond holders whose numbers are determined at random.
For every £1 you invest, you will receive a unique Bond number. Every month, each number has a separate and equal chance of winning a prize.
On the National Savings and Investment (NS&I) website, you may learn more, apply online, and check if you’ve won if you have Premium Bonds.
Is it possible to open a premium bond account on behalf of someone else?
To purchase them for yourself or someone else, you must be at least 16 years old.
If your child is under the age of 16, you can purchase Premium Bonds online, over the phone, or through the mail, or by transferring funds from another NS&I account in the child’s name.
Premium Bonds can be purchased online.
Premium Bonds can be purchased through our safe online system. Please have your debit card information handy.
You can buy Premium Bonds by bank transfer if you or the child you’re buying for already have some (including standing order).
The everyday option: a children’s saving account
Consider a children’s savings account if you want to give your grandchild a gift that won’t break or get uninteresting.
Some children’s accounts pay a significantly greater rate of interest than regular accounts.
Getting your grandchildren to open a savings account at a local bank or building society is a fantastic approach to start teaching them about money.
You might tell your grandchild that if they save money instead of spending it all at once, they would have a larger sum to spend on bigger purchases. Also, emphasize that their money is creating money when they receive interest.
It’s simple to save for grandchildren as a grandparent. If you present sufficient proof of identity, such as a birth certificate, you can create a savings account for them.
- If the money comes from a grandmother, the interest on the child’s account will not be taxed, unlike money donated by a parent, which will be taxed as if it were earned by the parent.
What is the best savings account for a grandchild?
The best rates are usually found in regular savings accounts. However, in order to get the interest rate, you’ll likely have to pay a certain amount each month. We’ve compiled a list of the best-paying regular savings accounts.
You might open a fixed-rate savings bond, which pays a high rate of interest. The money is, however, locked up for a specified period of time, usually between one and five years.
Here you’ll find the greatest fixed-rate bonds. We also provide a list of the top savings accounts for kids.
Learn about Mia’s grandmother, who was able to pay £50,000 in school tuition after selling her property.
The investment option: junior ISAs
If you’re thinking ahead and want to aid your grandchildren when they’re older, get a junior ISA.
A junior ISA for a kid under the age of 16 can only be opened by parents or guardians with parental responsibility. However, anyone can add to the accounts up to the annual limit of £9,000. (2021-22 allowance)
- Junior ISA for stocks and shares: the money is also tax-free, but you can invest it in the stock market.
Cash may appear to be a safe bet, but with interest rates as low as they are, investing for as long as 18 years has a better chance of defeating inflation.
- Let’s say you deposited £500 into a junior stocks and shares ISA shortly after your granddaughter was born.
- Your grandchild’s pot might be worth roughly £14,350 when he or she turns 18. This assumes a 5% annual investment growth rate, minus 1% charges.
Because only the child can take the money out after they turn 18, using a junior ISA ensures that the money gets to your grandchild.
WARNING: They may spend the entire lump sum on fast vehicles and wild parties, but you still have time to impart financial advice.
If they do not spend it, the account will be moved to an adult ISA.
Is it possible for me to purchase premium bonds for a friend’s child?
To begin, let me state that Premium Bonds are a safe investment. They are government-backed and come from NS&I (previously National Savings & Investments). However, you should keep in mind that, after inflation is factored in, they will lose purchasing power from year to year.
There are a few things you should be aware of when it comes to Premium Bonds. To begin with, you can only purchase them for someone else if the receiver is under the age of 16; other family members must purchase them for themselves. They are available for purchase for any child, not only your own children or grandchildren. Premium Bonds for kids can be purchased online or by mail.
Adults can cash in their Premium Bonds whenever they wish, while bonds owned by children under the age of 16 can only be retrieved by the parent or guardian who has been designated.
Is it possible for me to open a post office savings account for my grandson?
A child can have a cash account, a stocks and shares account, or a cash plus stocks and shares account if they are eligible. At any given moment, a child can only have one cash account and one stocks and shares account. In the 2021/22 tax year, you can put up to £9,000 into a Junior ISA (6th April to 5th April).
0300 & 0345: Calls to 0300 & 0345 numbers from your fixed line or mobile will cost no more than calls to a regular geographic number beginning with 01 or 02, and may be included in your call package depending on your service provider. For training and compliance purposes, calls may be monitored or recorded.
0800: All calls to 0800 numbers, whether from a landline or a mobile phone, are free. For training and compliance purposes, calls may be monitored or recorded.
Is it possible to purchase bonds for my niece?
Your niece will need to open a Treasury Direct account if she doesn’t already have one in order to get the bond. (If she is under the age of 18, her parents must open a minor-linked TreasuryDirect account for her.) On the Delivery Request page, enter your niece’s TreasuryDirect account number, and the savings bond will be sent to her account. She won’t have to do anything after her account is set up to receive the bond. As soon as you purchase the bond, it begins to earn interest. It can be transferred one business day after purchase, but you are not required to do so right away. You can print a gift card from the site if you want to give her the gift in person or by mail.
For more information about opening an account and transferring a bond, see the TreasuryDirect FAQs.
TreasuryDirect allows you to purchase both series EE and series I bonds as gifts. These bonds are secure investments, but they are currently paying relatively little interest. EE bonds pay 0.6 percent interest each year, which is guaranteed for the life of the bond. EE bonds are guaranteed to double in value if kept for 20 years, independent of interest rate, as an inducement to long-term bondholders. I bonds pay a variable rate of 2.2 percent, which is increased every six months dependent on the rate of inflation (measured by changes in the consumer price index for all urban consumers, or CPI-U). See http://www.treasurydirect.gov/tdhome.htm for more information. For additional information on both types of savings bonds and how interest is credited, see the TreasuryDirect website.
What happens to Premium Bonds when the owner dies?
Premium Bonds cannot be inherited or transferred to another person’s name in the same way as funds from bank accounts and savings accounts can.
Instead, if you’re administering someone’s estate and need to deal with their Premium Bonds, you have two options. The first option is to sell them while they are still in the probate procedure. If you do this, the proceeds from the sale will become part of the estate and will be passed down to the beneficiaries after the estate administration is finished. This is the quickest way for Premium Bond beneficiaries to inherit money.
The alternative is to leave them alone for the time being. NS&I can keep Premium Bonds for up to 12 months following a person’s death. They are still eligible for monetary rewards throughout this time. The executor of the estate or a specified beneficiary can contact NS&I after 12 months to claim the rewards and cash out the Bonds. This will postpone the inheritance of wealth, but it may result in greater money in the end. As the executor, you should consult with the beneficiaries who will receive the estate’s funds to determine which option is best for their individual circumstances.