Northern Rock's "Little Rock", the 5% three-year fix offered to children as a substitute to Child Trust Funds, has been closed after just 5 days on the child savings market.
Although the scheme had received massive support and popularity, Northern Rock says that the closure was just normal business practice. A Northern Rock spokesperson said it was just “business as usual” with EU trading rules limiting the amount of deposits the bank could receive.
As the bank is owned by the Government, they are only allowed to hold £20billion worth of savers accounts at a time. Consequently, the bank must carefully monitor the cash flow and must always adjust and remove plans in order to keep within the legal boundaries set by the EU.
With a liberal 5%, the Little Rock account may have ended up proving too popular for the bank be legal, reported the spokesperson. Other minor cuts have been made by the bank recently, most notably the “fixed rate” ISA accounts last month. Northern Rock also removed the fixed-3% one-year Isa plan.
The firm also announced that the account has considered releasing a new child savings account from as early as next month, although no official dates have been reported as of yet. The spokesperson added that they are unsure whether they would have an account as generous as a 5%-fixed rate in the future. Rivals such as Halifax have 6%-fixed rate child savings accounts, although Halifax requires monthly deposits of at least £10.
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