Should you bother with a Jisa?

Lastweek marked the first anniversary of the Junior Isa (or Jisa) scheme the government's tax-free savings scheme for children. But, according to Stephen Womack on Thisismoney.co.uk, "fewer than half of parents know what a Jisa is", and a survey suggests that only one in 100 eligible families have used the scheme so far. The uptake is particularly low in households earning below £28,000.

The tax breaks are decent enough up to £3,600 per year can be invested in a cash or stocks and shares Jisa, or a mixture of the two, and from then on interest (in a cash account) and/or dividends and capital gains (in a stocks and shares account) are tax-free.

But there are several problems. Firstly, children with funds stuck in the previous lacklustre scheme, the Child Trust Fund, are ineligible. Next, while the average rate on Jisas is 2.81%, according to Moneyfacts.co.uk, they are not market-beating (the best standard cash Isa rate is 3.25%).

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But the biggest drawback is that the money is controlled by the child, not the parent or grandparent, once they turn 18. Many parents may not want to take a gamble on their child's spending priorities, even when it's a tax-free one.