The best Junior ISAs for your children

Junior ISAs (JISAs) are a great way to usher your kids into the savings habit early in their lives. Launched three years ago, they allow funds to be paid into a tax-free savings account held in the name of an under-18 by a family member.

Like regular adult ISAs, JISAs come in cash as well as stocks and shares varieties. Up to £4,080 can be invested in one or both types of JISAs (although the combined amount can't be over that limit) in the current tax year and the funds cannot be withdrawn until the child turns 18 – when the account turns into a regular adult ISA.

Previously, one downside with these ISAs is that they weren't available to any child who held or was eligible for a Child Trust Fund, the Government-backed scheme that closed to new business in 2011. But the rules changed on 6th April and CTFs can now be transferred into Junior ISAs.

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

Halifax's 4% Junior ISA

Halifax has the top-paying Cash JISA with a variable rate of 4% – 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. If a parent doesn't have a Halifax ISA, the interest rate on the JISA will be 3%.

So how do Halifax's regular adult rates stack up?

If you're after an easy access account, Halifax's ISA Saver Online offers 1.05% 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%.

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 rate ISAs stack up:

Transfers in are allowed from other ISAs.

At the moment, none of the Halifax cash ISA deals are market leading. So you will need to be willing to make a trade-off on your own savings in order to access the best rate for your child.

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Other cash options

But if you're not up for taking a worse rate on your savings to secure the best rate for your child, here are some other leading Junior Cash ISA accounts you could go for instead:

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.

Think about your attitude to risk, although bear in mind that this investment could be for up to 18 years so you should have time to ride out any rough patches.

Make sure you shop around on management charges and fees. And beware of companies offering incentives such as free shopping vouchers in an attempt to blind you to high charges and poor performance. Although, of course, past performance is no indicator of what might happen in the future.

But remember, if you don't use your or your child's annual ISA allowance by the end of the financial year – 5th April – you'll lose it!

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.

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Read more on AOL Money

Why cash ISAs aren't dead yet

10 things you didn't know about ISAs