Junior ISAs and child savings accounts both exist to help you save for your child’s future, but they suit different needs.
The most obvious difference is that only parents or legal guardians can open a junior ISA (JISA) for the child, whereas anyone can open a child savings account on their behalf. But JISAs are tax-exempt and don't let the child access the money early.
Key differences at a glance
| Junior ISA | Child savings account | |
|---|---|---|
| What kind of account is it? | Cash or stocks and shares (stocks and shares for a OneFamily Junior ISA). | Cash. |
| Who can access the money? | Only the child and only when they turn 18. | The person who opened the account and the child (from the age of seven). |
| Is there any tax to pay? | No. | There could be some tax to pay if the returns go over a certain amount. |
| Who can open the account? | Only a parent or legal guardian. | Anyone. |
| Who can pay in? | Anyone. | Anyone. |
| What is it best for? | Long-term savings for a child. | Teaching your child how to save and manage their money. |
What are junior ISAs?
Junior ISAs (JISAs) are long-term saving or investment accounts for children. They can be opened by a parent or legal guardian for children under 18 (under 16 for a OneFamily Junior ISA).
Anyone can pay into a JISA and the money is locked in for the child until they turn 18. You can’t open a JISA for a child who already has a child trust fund, but you can transfer a child trust fund into a junior ISA.
There are two types of JISA: cash and stocks and shares.
Cash junior ISAs
Cash JISAs grow by earning interest, like other savings accounts do, and aren’t invested.
So, they don't go down in value but they also don't have as much potential to go up in value as they might if the money was invested. If the cost-of-living goes up by more than the interest rate you're earning, the money could be worth less in the future.
Stocks and shares junior ISAs
Stocks and shares JISAs invest the money that is paid in in an investment fund. This gives the money more potential to grow over the long-term, but as the value is likely to go up and down, your child could get back less money than has been put in.
What are child savings accounts?
Child savings accounts are exactly what they sound like: savings accounts for children. They’re simple cash accounts that grow by earning interest. You can open some savings account for children up to 18 years old with any amount from £1.
Child savings accounts are mostly designed to help you teach your child about saving and money management. The money can be accessed at any time.
There are three types of child savings accounts: easy access, instant access and regular.
Easy-access and instant-access child savings accounts
Easy-access and instant-access child savings accounts are very similar. Both let you or your child put money in and take money out at any time.
With instant-access accounts you can do this straightaway, for example by taking money out of a cash machine.
It can take slightly longer to take money out of an easy-access account, but it’s still easier to get your hands on the money than it is with a regular child savings account.
Check the rules on the account as some providers may limit how many times you can take money out or offer lower interest rates if you do so often.
These types of accounts tend to have lower interest rates overall than regular savings accounts.
Regular child savings accounts
Regular child savings accounts are designed for more regular saving.
You have to deposit money into the account at least once a month and it may take longer to withdraw from than it does with an easy-access child savings account.
They usually have a higher interest rate than easy-access child savings accounts, but if you miss some of your monthly payments the interest rate could go down.
What are the similarities between junior ISAs and child savings accounts?
Both JISAs and child savings accounts are designed to help you save for your child. They both have a low opening deposits - you can open a OneFamily JISA with as little as £10 and some child savings accounts with £1.
What are the differences between junior ISAs and child savings accounts?
| Junior ISAs | Child savings accounts | |
|---|---|---|
| What's the minimum investment? | £10 (for OneFamily Junior ISAs, other junior ISA providers have different minimum investments) | £1 |
| What are the age limits on the account? | You can open a junior ISA for children from birth up to the age of 18 (OneFamily Junior ISAs can be opened up to the age of 16). | Child savings accounts can be opened for children from birth up to the age of 18. |
| How much can you pay in? | Up to £9,000 each tax year. | There is no limit. |
| Who can open the account? | Only someone with parental responsibility (the child's parent or legal guardian). | Anyone. |
| Who can pay money in? | Anyone. | Anyone. |
| Who can take money out? | Only the child and only when they turn 18. | The person who opened the account can withdraw money at any time. The child themselves can take money out from the age of seven. |
| Do we need to pay tax on the interest or returns? | No. | Parents should inform HMRC if their child makes more than £100 in interest during a tax year. They will only have to pay tax however if this takes them over their Personal Savings Allowance. |
| How is the account managed? | The parent or legal guardian who opened the account manages it until the child can take control at 16. | The child can manage their own account, along with the person who opened it, from the age of seven. |
Can a child have a junior ISA and a child savings account?
Yes. You could open a JISA for your child to support them at the start of adulthood while also opening a child savings account to teach them about the importance of saving and managing money.
That way, when they gain access to the money in their JISA at 18, they might be better equipped to manage it responsibly.
What’s the best way to save for grandchildren?
If you want your grandchild to access the money you save when they turn 18, a JISA could be a good option. Grandparents can’t open a JISA for a child (unless they are their legal guardian) but they can pay into one.
Ask your grandchild’s parents if they’ve opened a JISA for them. As long as they're not already reaching the annual allowance limit, you could help support your grandchild by also paying in.
JISAs can also helpful when it comes to inheritance tax.
Grandparents can open a child savings account but the child may be able to take the money out whenever they want, depending on the account.
What type of account should I open for my child?
Your child can have a cash JISA, a stocks and shares JISA, a child savings account and even a tax-exempt savings plan at the same time. Different types of accounts are better for different purposes and situations.
Junior ISAs are designed for long-term saving and supporting your child financially when they turn 18.
As no-one can take the money out before then, they could be a better option if you want to build up a lump sum that your child can then use to help them get a head start in their adult life.
This could mean moving the money into a different product, such as a lifetime ISA or adult ISA, buying their first car or going to university.
Child savings accounts are easier to withdraw from, as the money isn’t locked in for the child.
As your child can manage their own account from a young age, they’re a good option to teach them about the importance of savings and managing their money.
Rather than using them for long-term saving, child savings accounts could be useful to help your child save up their pocket money and gift money so they can spend it on larger purchases later on.
What would you like to do next?
Open a OneFamily Junior ISA
Start investing for your child's future today.
Find out more about junior ISAs
Our guides contain everything you need to know to about investing for your child's future in a junior ISA.
Transfer to OneFamily
Transferring a child trust fund or junior ISA from another provider to OneFamily is simple and we don't charge you to do so.
Open a OneFamily Junior ISA
Give your child more options when they reach 18 with our straightforward Junior ISA. Simply choose one of our three climate-focused funds to start investing on their behalf.
Our Junior ISA invests in stocks and shares. The value is therefore likely to go up and down over time.
This is normal for this type on investment, but it means there is a risk your child could get back less than has been paid in if they withdraw at a time when the value is lower.
