Best Junior cash Isas: Today’s latest rates

The earlier you start saving for the future, the better, as the old adage goes. That is just as true for your children or grandchildren – and a Junior Isa can provide a good option.

Of course, newborns and young children can’t have a bank account of their own, but you can give them a head start financially by opening a savings account on their behalf.

There are a few different ways to save for children, including savings accounts, bonds or Isas, and they all have different benefits and downsides.

This guide will explain what a Junior Isa is – including how these accounts work, their main benefits are and which are currently some of the best:

• How we determine the best rates
• The best Junior cash Isas
• What is a Junior cash Isa?
• How many Junior Isas can I open?
• Junior cash Isa FAQs

How we determine the best rates

The Best Buy tables show the best savings rates widely available in the market. This means certain accounts are excluded, including those that require minimum deposits of more than £25,000 or are available only to local or existing customers.

The data in these tables is provided by Savings Data Limited and is compiled using automated tracker tools and updates from savings providers. Savings Data Limited then manually checks the information and enters it into a database that feeds the live tables, which update daily.

The savings accounts shown are protected by the Financial Services Compensation Scheme. The information in this article is intended for information purposes and should not be taken as endorsement or advice.

The best Junior cash Isas

Use the table below to explore your options for a Junior cash Isa.

For more options to set up a nest egg for your children, don’t miss our guide to the best child savings accounts.

If you want to continue helping your child to save after they’ve reached 18, check our guide to the best cash Isas, and best Lifetime Isas.

What is a Junior Isa?

A Junior Isa is a type of savings account that allows you to put away money for the long-term for a child, and any interest is free from tax.

Similar to an adult Isa, the amount you can save each year is capped. The limit for an adult Isa is £20,000, but the limit for a Junior Isa is lower at £9,000.

Be aware this limit applies per tax year and not calendar year, so you will need to calculate your savings from April to April.

You can open a Junior Isa if your child is under 18 and lives in the UK.

There are two types of Junior Isa available: cash, which will earn interest like a normal savings account, and stocks and shares, which allows you to invest the money.

Parents or guardians will be responsible for the money in the account but it will not belong to them – it belongs to the child. The child can take control of the account when they turn 16, but the money cannot be withdrawn until they turn 18.

Expert opinion: Things to consider when choosing a Junior cash Isa

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said:

• “Savers can choose a cash interest option or stocks and shares, where the latter over the longer term is likely to outperform interest rates.
• Anyone who still has their cash saved in a Child Trust Fund would be wise to transfer it to a Junior Isa, because you can not hold both at the same time for a child. However, you can have a Junior cash Isa and Junior stocks and shares Isa, so long as the overall pot keeps within the annual limit of £9,000 across both as a total.
• Stocks and shares Junior Isas may be a more attractive alternative for savers who are prepared for a little risk and could outperform cash returns. As with any fund, growth is never a guarantee.
• As an alternative to Junior Isas, there are a few children’s savings accounts which could be useful for parents to consider, but some do have certain eligibility criteria to meet. Some accounts only have a 12-month fixed term, where others are more flexible. This means parents need to take some time to navigate all the accounts to ensure it suits their needs.”

How many Junior Isas can I open?

You cannot open more than two Junior Isas; one Junior cash Isa and one Junior stocks and shares Isa can be open at the same time, but no more.

You can switch between the two types or transfer from one provider to another, but it’s important to do so carefully to ensure you don’t lose the tax-free status on the money.

Junior cash Isa FAQs

What are the disadvantages of a Junior cash Isa?

As savings accounts go, Junior cash Isas are a pretty good way to put money away for your child. There are a few downsides, however.

The money is locked in until they are 18, meaning if they have financial difficulties, or simply want to put the money towards something else before that time, they won’t be able to access the cash.

They are also restricted from investing the money, meaning that inflation could eat away at the value of the pot if it doesn’t pay enough interest. Our inflation calculator demonstrates the effect inflation could have on your savings.

Some parents may also consider it a downside that the child will have full control of the money when they turn 18. You can give advice about what they should do with it, but ultimately the choice is theirs.

Can grandparents open a Junior Isa?

No, a Junior Isa can only be opened by parents or guardians on behalf of their child (if a grandparent is the child’s legal guardian, then they will be able to open the account).

However, anyone can pay into a Junior Isa on behalf of the child, and so they are a simple way of allowing the whole family – including grandparents – to save on a child’s behalf.

Is it better to have a Child Trust Fund or a Junior cash Isa?

While it is no longer possible to open a Child Trust Fund, some children born at a certain time may still have one.

They operate in a broadly similar way to a Junior Isa, in that they both allow either cash or stocks and shares, mature at 18, and have the same £9,000 annual limit, although a Child Trust Fund limit resets on the child’s birthday.

While a Junior Isa automatically becomes an adult Isa when the child turns 18, the child will need to choose how to access their matured trust fund.

If you want to open a Junior Isa for your child with a trust fund, it might be a good idea to transfer the fund into the Isa. This would make it easier to stay on top of your contribution limits.

Can parents withdraw money from a Junior Isa?

No, parents cannot withdraw the money from a Junior Isa. The money belongs to the child. The only exception is if the child who owns the account dies or is declared terminally ill.

What are the benefits of a Junior stocks and shares Isa?

The other type of Junior Isa operates in much the same way as the cash version. The only difference is you are able to invest the money saved within the account and any returns are free from tax.

What you can invest in will differ between providers. Also be aware that, as with all investments, the value of your money can go down as well as up and so you should be comfortable investing for the long term.

Given that the money cannot be accessed until your child turns 18 a Junior Isa is well suited to investing.