BEST ONES BEAT THE RATES FOR ADULTS

CHILDREN can hold both a cash and an investment Junior Isa.

Although no cash Junior Isa currently pays an interest rate that beats inflation, the best deals are more favourable than those offered on adult cash Isas.

The best rate available is 2.4 per cent from The Family Building Society, offered on balances above £3,000.

Balances from £1 to £1,000 earn 1.65 per cent and between £1,000 to £3,000, 2.15 per cent. You can only open the account in the branch in Epsom, Surrey, or by post. It accepts transfers from all Junior Isas, but not Child Trust Funds (the precursor to Junior Isas).

For the best interest rate with online access, Coventry Building Society pays 2.35 per cent.

It accepts transfers from existing Junior Isas and Child Trust Funds. You can open the account online, but must then manage it in branch, by post or over the phone.

Tesco Bank pays 2.25 per cent on its Junior cash Isa and you can both open and manage the account online. It accepts transfers from cash Junior Isas and Child Trust Funds, but not stocks and shares Junior Isas.

At present, no bank offers an ethical cash Junior Isa.

Triodos Bank has in the past, but it has closed its Junior Isa to new applicants.

However, some credit unions do. For example Clockwise Credit Union offers a Junior Isa paying one per cent to children living in Leicestershire, Northamptonshire and Warwickshire.