Red tape surrounding opening CTFs has been cut back. Now receiving a CTF voucher before opening this type of saving account is voluntary rather than mandatory.

Vouchers had put parents off in the past as they had to be given to the account provider no later then seven days after their expiry date.

Under the new scheme, effective as of April 1st 2009, parents now just need to supply information such as the child's date of birth and unique voucher number.

This has changed the application system into a one-stage rather than two-tier process.

What is a CTF

In short, a CTF is an initiative that any child who is eligible for benefit and a UK resident, born after the 1st of September, can qualify for.

When parents apply for child benefit HM Revenue and Customs will arrange for a £250 CFT voucher, to open the account with.

Families receiving full Child Tax Credit will get a further £250 paid straight into their account.

Parents can then put the money either into a stakeholder account, which will invest the money in stocks and shares, or a cash saving account - making this choice is a gamble by parents to get the best savings rate.

The idea of such an account is to make sure that all children have financial backing when they reach adulthood.

How to apply

Currently, parents can apply to open a CTF over the internet or on the phone. After they have done this they then need to post their voucher off.

However, as of April next year, parents will be able to quote the voucher number rather than posting it.

Miles Bingham, head of savings and investments at leading provider of CTFs Family Investments, said: "We're very clear that parents find a two-stage process cumbersome."

He added: "With parents with eight week old children – which is typically the date at which the child trust fund voucher comes out – just simple things like putting a piece of paper in an envelope and sending it off don't always get done."

Mr Bingham concluded that under the current system this has meant that there are a "whole bunch of people" who are applying for a CTF, but never complete the process, because they do not actually send off the physical voucher.

Which type of CTF is for me?

According to Family Investments, 76 per cent of CTFs have gone into stakeholder accounts compared to just 19 per cent into cash accounts.

Stakeholder accounts work by investing the money into stocks and shares to make money for the child, while cash accounts accrue money at a fixed rate of interest.

There are also ethical trust funds available for parents with green aspirations. This account works on a stakeholder basis, investing in shares, but avoids companies that generate any significant earnings from tobacco, supplying any o-zone depleting chemicals or using intensive farming methods, amongst other activities.