Pretty brunette student withdrawing cash at an ATM

Spend or save? What to do with the maturing Child Trust Fund? - Credit: Getty Images/Wavebreak Media

When children reach their 18th birthday their Child Trust Fund (CTF) matures, meaning that they can access the money in the account for the first time, says finance expert Derin Clark  

All children born between 1 September 2002 and 2 January 2011 were eligible for a CTF and recent data released by the Government shows that in June there were just over 60 million of these accounts in existence. 

On the opening of each CTF, the Government initially deposited a minimum of £250 to activate the account, while further additions up to £9,000 could be added each year. There were two types of CTF available – cash savings accounts and ones that invested in stocks and shares. The same Government data shows that there is an average of £1,500 in each CTF and with thousands of children turning 18 each week, many will be wondering what to do with their CTF pay out. 

Although it might be tempting to spend the money, unless it is urgently needed, it might be better to use the funds as a basis to continue saving, for example towards a future house deposit. 

Money cost saving or money reserve for goal and success in school, higher level education concept :

Saving the maturing CTF could provide your child with a step to independence upon graduation - Credit: Getty Images/iStockphoto

Those with a cash savings CTF may want to continue saving into a savings account, while those with a CTF invested in stocks and shares may prefer to continue investing. There is no obligation, however, to continue with the same type of account and, especially with savings rates still disappointingly low, those who are not looking to use their money for five years or more and who are happy to take the risk of not making a return on their investment, along with the possibility of losing their initial funds, may want to consider investing instead. 

Another aspect to consider is that CTF accounts are tax-free, which means that depending on how much money is deposited in the account and what type of account is used, tax could be payable on interest earned when moving the funds to a different savings account or investments. A solution could be to transfer funds to a cash or stocks and shares ISA, which have a tax-free allowance on deposits of up to £20,000 for the 2021/22 tax year. 

For those with a few thousand in their CTF and who want to continue adding to their savings, it might be worthwhile moving the money to an easy access savings account or ISA. Although these types of savings accounts usually have the lowest saving rates, they allow savers to continue making further deposits into the accounts and to withdraw the money at any time. 

Alternatively, those who are certain they want to use the money towards a future house deposit may want to consider opening a Lifetime ISA (LISA). A LISA has the benefit of a 25% Government bonus on money deposited into the account each year. Up to £4,000 can be deposited into LISAs yearly, meaning that savers could get a maximum Government bonus of £1,000 each year. The drawback with LISAs is that the money saved can only be withdrawn for a few specified reasons, such as a deposit for a first home, or will incur a withdrawal penalty that wipes out the Government bonus and some of the money saved. 

Derin Clark is an Online Reporter at, the money comparison experts, specialising in personal finance.