Junior ISAs can be a useful option to help you build long-term tax-free savings for your child. Here are the best Junior ISAs for the 2019/20 tax year.
Coventry Building Society offers the best interest rate of 3.6% for its Junior ISA, at the time of writing.
That's currently a better rate than any easy-access cash ISA or savings account, but this Junior ISA can only be opened and managed by post, over the phone or in branch.
We take a closer look at Junior ISAs and how Coventry Building Society’s rate stacks up against the competition.
Compare investment Junior ISAs with loveMONEY
What is a Junior ISA?
Junior ISAs (or 'JISAs', as they are often abbreviated to) are a great way to build a long-term savings pot for your child, which is also tax-free.
They allow funds to be paid – by anyone – into a tax-free savings account held in the name of a child under the age of18.
Like regular adult ISAs, JISAs come in cash and Stocks and Shares varieties.
Up to £4,368 can be invested in one or both types of JISAs (although the combined amount can't be over that limit) in 2019/20.
Children that are 16 or 17 can contribute another £20,000 into a Cash ISA.
Funds cannot be withdrawn from the Junior ISA until the child turns 18 – when the account turns into a regular adult ISA.
One downside with these ISAs is that a child cannot have a Child Trust Fund (CTF) and a Junior ISA. CTFs are a Government-backed savings scheme that closed to new business in 2011.
But the rules have changed, as CTFs can now be transferred into Junior ISAs.
So, what are the best Cash JISAs around at the moment?
Compare cash ISAs, savings accounts and peer-to-peer investments (capital at risk)
The best Cash Junior ISAs
As it stands, Coventry Building Society has the top-paying Cash JISA with a variable rate of 3.6% and you can start with a tiny deposit of only £1.
Anyone – parents, grandparents, other family members and friends can pay in by cash, cheque or by money transfer.
Cash can be transferred to another Junior ISA, but you must move all of it.
Here are other top deals to consider.
|
Account |
Interest Rate (AER) |
Minimum Deposit |
Transfers in allowed? |
Transfers out notice period |
Access |
|---|---|---|---|---|---|
|
Coventry BS Junior Cash ISA (1) |
3.6% |
£1 |
Yes |
No notice |
Post, phone, branch |
|
Danske Bank Junior Cash ISA |
3.45% |
£25 |
Yes |
No notice |
Branch, phone |
|
Darlington BS Junior Cash ISA |
3.25% |
£1 |
Yes |
No notice |
Post, branch |
|
TSB Junior Cash ISA |
3.25% |
£1 |
Yes |
No notice |
In branch, over the phone (to manage account) |
|
NS&I Junior ISA |
3.25% |
£1 |
Yes |
No notice |
Online only |
|
Tesco Bank Junior Cash ISA |
3.15% |
£1 |
Yes |
No notice |
Online, over the phone |
|
Halifax Junior Cash ISA |
3% |
£1 |
Yes |
No notice |
Online (to open account), in branch |
While the Coventry BS Junior Cash ISA has the best interest rate, one of the main selling points of NS&I is that your funds are 100% guaranteed.
But when it comes to the cash version of Junior ISAs, there's a good chance you'll enjoy equal protection from any of the rivals above.
Why? Because any institution covered by the FSCS guarantees your savings of up to £85,000 are safe if a member bank or building society goes under.
Considering the annual ISA allowance and the rates on offer, it's unlikely your child's funds will exceed that threshold before they turn 18.
Stocks & Shares Junior ISAs
Stocks and Shares Junior ISAs tend to offer a better return than Cash JISAs over the long-term, 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.
You need to think about your risk appetite, although bear in mind 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 to make sure you don’t get hit by higher 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.
Of course, past performance is no indicator of what might happen in the future.
Take a look at our Beginner's guide to Stocks & Shares ISAs and don’t be afraid to ask a question on our Q&A board to get tips from other, more seasoned, investors.
Remember, if you don’t use your or your child's annual ISA allowance by the end of the financial year – 5 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.
This article is regularly updated to reflect changes in rates