The last batch of parents whose offspring are eligible for the child trust fund (CTF) only have a few weeks to choose where to save or invest their free cash, or face having it automatically placed in a poor-paying or risky account.

Anyone whose child was born between 1 September 2002 and 2 January 2011 got up to 500 when their kid was born, and again, on their 7th birthday.

However, these payments stopped at the end of last year to make way for junior Isas, which are tax-efficient savings for kids, which launch next month.

CTF payments were made in the form of a voucher, which is valid for a year. The last set of vouchers will be a year old on 1 January 2012.

What if your voucher is less than a year old?

If you've yet to use a voucher, you can save or invest it with any bank, building society or investment firm that offers a CTF account.

The money can either be placed in a CTF savings account, which is similar to a cash Isa as interest is not taxed; or, a CTF investment where any gains are also tax-free.

CTFs can also be topped up by parents up to a maximum 1,200 a year, rising to 3,600 next month.

What if your voucher is more than a year old?

At that point, if not used, the money will be placed by the Government on behalf of the child in an investment account.

The money will go into a 'stakeholder investment' from any one of numerous providers, which include banks, building societies and investment houses, as chosen by the Government.

It works on a 'cab rank' system whereby whoever is next in the queue is given an investment from whichever provider is next in the provider queue.

A stakeholder investment is where the money is initially invested in shares and bonds across a number of companies. When the child is 13, it is moved to lower-risk investments.

Not only does this mean the return could be poor, but as it's an investment, not a savings account, there is a risk you'll get back less than what you started with.

What if the Government or you has already invested the cash?

If the money is already saved or invested, you can move it to a different savings or investment account.

What happens when junior Isas launch?

On 1 November, those within the junior Isa system (those born before 1 September 2002 or from 2011-onwards) will be able to transfer within the junior Isa market to another provider.

However, a CTF cannot be transferred into a junior Isa, nor vice versa.

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