Child Trust Funds setting saving trends

Child trust funds (CTFs) are changing the way Britons think about saving, according to industry experts.

Ed Balls, the economic secretary, has announced that over 2.6 million CTFs have been opened since the scheme started almost two years ago.

He said: "It is really encouraging that three in four parents are opening accounts for their children."

The government gives each child £250 upon birth which is invested in one of three types of CTF on the child’s behalf, with families able to put up to £1,200 a year in the account.

Mr Balls added that the fund could be used not only to provide the child with a useful sum once they reach 18, but that it could also be used to teach young people about investment and the responsibilities for money.

David White, chief executive of The Children’s Mutual, said: "These latest figures clearly show the beginning of a significant shift in the way this nation is thinking about saving for the future. This is brilliant news for future generations."

This news comes after the Department for Education and Skills found that young people are confused about finances, with 40 per cent of 16 to 21-year-olds unaware of what APR stands for and a quarter believing that store cards offer better value than credit cards.