Savings Accounts & Junior ISAs for Teens in the UK
What every teen (and parent) should know about Savings Accounts & Junior ISAs for Teens before deciding where to put your money.
Money for teens often arrives in small chunks. Birthday cash, part-time jobs, pocket money. Deciding where to park that money isn’t trivial. Do you stick with a safe savings account, or use a Junior ISA to grow your money over time? We take a look at the pros and cons of teen-friendly savings accounts and Junior ISAs and things to watch out for.
Junior ISAs
Junior ISAs allow people aged under 18 to save tax-free. They come in two types: cash Junior ISAs and stocks & shares Junior ISAs. All money is locked until you turn 18. The 2025/26 allowance is £9,000 across both types. Tax-free growth, dividends, and interest are included.
Key comparison: savings accounts vs Junior ISAs
| Feature | Savings Accounts | Junior ISAs |
|---|---|---|
| Safety / capital protection | Very safe, FSCS-protected up to £85,000 | Cash Junior ISAs are FSCS-protected; stocks & shares Junior ISAs can fall in value |
| Potential returns | Modest interest (2–5% for top accounts) | Stocks & shares Junior ISAs have higher potential returns over long term; cash JISAs similar to savings accounts |
| Access / liquidity | Usually flexible, some restrictions for special accounts | Locked until age 18 |
| Risk / volatility | Very low risk | Cash JISAs: low risk; stocks & shares JISAs: higher volatility |
| Tax efficiency | Small balances generally tax-free | Fully tax-free within the ISA wrapper |
| Costs / fees | Usually none | Stocks & shares JISAs have platform/fund fees; cash JISAs usually free |
When each option makes sense
Use a savings account when saving for short- to medium-term goals, you want flexibility, or are younger and want a safe place to build savings habits. Use a Junior ISA (cash or stocks) when planning for long-term growth, you want tax-free benefits, and are okay with locking money until you’re 18.
Example “Starter Package” for Teens
| Purpose | Amount | Where to Put It | Goal / Time Horizon |
|---|---|---|---|
| Emergency / short-term buffer | 10–20% | Teen-friendly savings account | Needed within 1–3 years |
| Medium-term / growth | 30–40% | Cash Junior ISA | Savings goals for teen years |
| Long-term / growth | 40–60% | Stocks & Shares Junior ISA | Held until 18, for university, car, or first home deposit |
Illustrative scenarios
Lucy, 14: Saving ~£1,200 in 2 years for a laptop → prioritize savings account.
Daniel, 16: Receiving £500 birthday money → put some into cash Junior ISA for medium-term growth and some into stocks & shares Junior ISA for long-term growth.
Risks, disclaimers & caveats
Cash is safe, but interest may not keep pace with inflation. Stocks & shares Junior ISAs can lose value in the short term. Fees matter for investing platforms. Money in Junior ISAs is locked until age 18. Diversify investments and avoid “hot tips.”
Quick Tips for Teens
- Start early: even small amounts grow over time.
- Split your money: keep some accessible in savings, some in JISA for growth.
- Diversify: if using stocks & shares JISA, spread money across funds or ETFs.
- Check fees: cash accounts usually free; stocks & shares JISAs may charge platform/fund fees.
