One of the most important things to know when you set out to compare Junior ISA accounts for your child is that you are not locked in with one provider just because you opened your account there. One regulation is that your child is only allowed to hold both types of Junior ISAs – a stocks and shares and cash Junior ISA – if they are with the same provider. However, you are still allowed to compare Junior ISA providers and move all of your accounts to a different one rather than remaining loyal to your bank or building society.
300 times more interest
In fact, a recent study by data providers Defaqto has shown that it may be more crucial than ever before to compare Junior ISA providers and rates. The study suggests that savers who put their money into the highest-paying instant access savings account in 2009, and then did the same in 2010, earned almost 300 times more interest than savers who let their money lie dormant in an underperforming account.
Instant access accounts typically have much lower rates than long-term savings vehicles like the Junior ISA, so the results of they survey do not mean that choosing one Junior ISA over another will get your child 300 times more in returns. However, it’s useful for parents to keep in mind that a savvy saver got £71.73 in interest just on their instant access savings, compared to a lazy saver who earned just 24p.
The cautionary tale of the saver who earned just 24p in interest over two years, or 298 times less than he could have earned, is enough to motivate most concerned parents to compare Junior ISA rates when shopping around for the best place to start their child’s nest egg.
Experts at Defaqto, the firm that carried out the savings research, said that the results show how banks benefit from savers’ loyalty, even when they haven’t earned it by providing competitive rates. They went on to say that the survey highlighlights the importance of switching your savings accounts, sometimes every year, in order to get the best savings rates available.
Parents who are looking to maximise their savings and provide the most money for their child’s future education, wedding, or even house need to compare Junior ISA rates, as well as compare the Junior ISA to other children’s savings vehicles. However currently, as the Junior ISA picks up steam and is being rolled out by many providers, this children’s savings account has some of the highest and most competitive return rates.
Remi Collins from www.comparejuniorisa.com writes about tax-free savings for children with the Junior ISA and other savings vehicles.