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Do you understand the ins and outs of a JISA?

Do you understand the ins and outs of a JISA?

Category: ISAs

Updated: 04/11/2014
First Published: 03/11/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

This week heralds the JISA's third birthday, but although this type of savings vehicle is no longer the new kid on the savings block, it seems that many parents still haven't quite got their heads around the rules.

Foggy on the details

JISAs, or Junior ISAs, were introduced in 2011 as a replacement for Child Trust Funds and give parents an alternative for tax-free saving for their children. Any child who does not already have a Child Trust Fund can open a JISA, which can hold up to £4,000 in the 2014-15 tax year.

However, according to a survey by website, many parents are unaware of crucial details, which could mean that their children are missing out.

The research found that almost half of parents (49%) believe that all children are eligible for a JISA, while just over one in 10 (11%) think that there are no limits on how much money they can deposit into one. Meanwhile, 37% of parents confessed that they didn't know or weren't sure about whether any child could have a JISA, and around a third (33%) of parents admitted that they were unsure of any limits attached to such an account.

These findings clearly suggest that many parents are foggy when it comes to the details of the JISA; and this could mean that they are underestimating its worth when it comes to saving for their children's futures.

Commenting on the findings, Sarah Pennells, founder of, said: "The first steps of any new savings product are bound to be a little wobbly, but by the time it's reached its third birthday, you'd think there'd be a much more widespread understanding of how a junior ISA works… Junior ISAs aren't the only way to save or invest for a child, but it's vital that parents understand how they work so they can make an informed choice."

Missing out

The knowledge gaps surrounding JISAs may mean that these savings accounts are being overlooked when parents weigh up the options for building a nest egg for their offspring. As a result, valuable funds intended for the future could be languishing away in savings vehicles that aren't making the money saved in them work hard enough.

Research carried out by Scottish Friendly found that while nearly four out of five parents (78%) are stashing cash away for their children, only 21% of them are putting that cash into a JISA. Instead, traditional savings accounts were the most popular choice, with 51% of parents depositing funds in them.

While good old-fashioned savings accounts mean that the capital stored there is guaranteed, the current long-standing trend of miserly interest rates mean that any money stashed in these accounts is gaining very little. JISAs, on the other hand, offer a way to beat the rate of inflation and gain a far more measurable return.

JISAs come in two varieties: cash and stocks & shares. Cash JISAs are subject to the same interest rate issues as traditional savings accounts, but stocks & shares JISAs offer parents a way to make their children's savings work harder and gain greater interest.

Calum Bennie, marketing manager at Scottish Friendly, explains: "Interest rates remain at an all-time low and this is reflected in the rates of return on cash savings accounts. While your capital is guaranteed with cash, stocks & shares JISAs offer the potential for growth over the long-term… Stocks & shares can, of course, go down as well as up and the original investment is not guaranteed, but over a long investment period you are giving your money the chance to ride out the volatility of the stock market."

Getting the facts straight when it comes to JISAs should therefore be a must when it comes to picking a savings option for your children. While this type of account will undoubtedly not suit everyone, it is an option that is still worth weighing up. Filling in the gaps now is also ideal, as from April next year, holders of Child Trust Funds will be able to transfer their savings over to a JISA.

According to Scottish Friendly's research, one in three parents have decided to move their child's savings into a JISA from next April, while a quarter (25%) were still to make up their mind. However, another third of parents confessed that they didn't know that transferring their child's funds was going to be an option, which highlights the importance of getting informed.

Time to wise up

Understanding the market and all the options available to you will put you in the best possible position when it comes to making an informed choice about which type of savings account to go for. So, if you are thinking about investing some money for your child's future, or you want to find a savings vehicle that makes your money work harder, it's time to wise up and get all the details about junior ISAs.

If the idea of stocks & shares JISAs appeals to you, check out our general guide on this type of ISA to find out how they work and what happens to your investment. You can also read our guide on cash ISAs to find out more about these accounts.

To scout out the market and find the best JISA deals, head to our best buy charts where we have laid out the top junior ISAs currently on the market.

What next?

Read our guide on stocks & shares ISAs

Check out our guide on cash ISAs

Find the best JISA deal with our best buy chart

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.