The best Junior ISAs

Girl with pocket moneyTake a look at these Junior ISA options, one of which offers a 6% return...

Junior ISAs (JISAs) are a great way to usher your kids into the savings habit early in their lives. Launched in November 2011, they allow funds to be paid into a tax-free savings account held in the name of an under-18 by a family member.%VIRTUAL-SkimlinksPromo%
Like regular adult accounts, JISAs come in cash as well as stocks and shares varieties. Up to £3,600 can be invested across both types of JISAs in each financial year and the funds cannot be withdrawn until the child turns 18 – when the account turns into a regular adult ISA.
%VIRTUAL-ArticleSidebar%

However, one downside with these ISAs is that they are not available to anyone who holds a Child Trust Fund, the government-backed scheme that closed to new business last year.

So what are the best JISAs around at the moment? First up, the cash variety...

Halifax's 6% Junior ISA
Halifax has the top-paying Cash JISA with a variable rate of 6% - but you will have to jump through a hoop to get hold of it. The person with 'parental responsibility' for the JISA will also need to open up a regular Halifax ISA, although you only need to deposit £1.

So how do their regular adult rates stack up?
If you're after an easy access account, Halifax's ISA Saver Online offers 2.6% for 12 months on a minimum balance of £1 (transfers from other ISAs are also allowed). After the first year, the rate drops to a paltry 0.25% so you may want to think about.

But even with the temporary bonus, this account is still fairly middle-of-the-road for easy access ISAs.

If you're definitely after a Halifax account you'll get a better rate if you're prepared to lock your cash away for a set period. Here's how the bank's Fixed ISAs stack up:

Term

Rate

One-year

2.25%

Two years

3.25%

Three years

3.75%

Four years

3.80%

Five years

4.00%

Transfers in allowed from other ISAs.

So, lock away your cash for three years and you'll earn 3.75% on your adult stash and be eligible for the 6% Junior ISA. Not a bad savings duo. It's worth pointing out you can only open the Junior ISA in a branch.

Other cash options
But if that sounds like too much hassle, here are some other Junior Cash ISA options:

Provider

Interest Rate (AER)

Minimum Deposit

Transfers in allowed?

Transfer out notice period

Access

Nationwide BS Smart JISA

3.25% (1.15% bonus until 31/01/14)

£1

Yes

No notice

Branch

Coventry BS JISA

3.25%

£1

Yes

No notice

Branch, post, phone

Furness BS JISA

3.05%

£1

Yes

No notice

Branch, post, phone

Bank of Cyprus One Year Fixed JISA

3.05% (3.10% for existing customers)

£25

Yes

Written instruction before fixed term ends

Branch, post, online, phone

Skipton BS JISA

3.02%

£1

Yes

No notice

Branch, post

National Counties BS Cash JISA

3.01%

£3,000

Yes

45 days

Branch, post, phone

Lloyds TSB Junior Cash ISA

3.00%

£1

Yes

No notice

Branch

Halifax Junior Cash ISA

3.00%

£1

Yes

No notice

Branch

Beverley BS Junior Cash ISA

3.00%

£10

Yes

No notice

Post, branch

Bank of Cyprus Variable Cash ISA

2.75% (3.00% for existing customer)

£25

Yes

95 days

Branch, post, online, phone

Scottish BS Junior ISA

2.60%

£1

Yes

No notice

Branch, post

Progressive BS Cash Junior ISA

2.50%

£1

Yes

No notice

Branch, post

National Counties BS Cash JISA

2.26%

£1,000

Yes

45 days

Branch, post, phone

Triodos Bank Ethical Junior ISA

2.01%

£1

Yes

No notice

Online, post

Nationwide's Smart JISA is a competitive offering at 3.25%. However, the account is boosted by a 1.15% bonus that will fall away after 12 months, leaving you earning just 2.10%.

Meanwhile, the Coventry Building Society's Junior ISA offers the same interest rate with no bonus tied in.

The Bank of Cyprus offers a few different JISA variations. The one-year fix pays out at 3.05% for new customers and 3.10% for existing customers, while its variable notice account offers 2.75% to new customers and 3% to existing ones. The bank also has a combination JISA, whereby you start with a variable rate and can switch the fund onto a fixed rate at a later date.

Stocks and shares Junior ISAs
Stocks and shares Junior ISAs will usually offer a better return than Cash JISAs, but they are riskier. There is obviously the potential that you could lose money – a threat that is not there with the Cash ISA.

Picking a stocks and shares JISA is slightly trickier than choosing a cash account. If you already have an adult stocks and shares ISA, try speaking to your existing provider about what they have to offer. Otherwise it's just a case of shopping around and consistently checking the historic return rates of the accounts. Asking a question on our Q&A board to get some advice from other more seasoned savers is another good idea.

And remember, if you don't use your or your child's annual ISA or JISA allowance by the end of the financial year – 5th April – you'll lose them. So get investing!

Have you got one?
Have you – or more accurately, your kids – got a Junior ISA? Let us know about your experiences in the Comments box below.

This article is regularly updated to reflect changes in rates

More stories


Read Full Story

FROM OUR PARTNERS