Beanstalk* is a UK ISA provider that brands its products as being easy to use and simple to set up. Its target market is adults looking to build a future savings pot for a child through a Stocks and Shares Junior ISA. Junior ISAs are a tax-efficient way to save up money for a child that protects the funds from being spent by the adult who set up the account or the child, until they are 18. Many parents or legal guardians may be worried about how their child will deal with future financial challenges and the rising cost of living, so building up some savings to get them started can seem like a great option. In this review we explain how a Junior ISA works and whether the Beanstalk Junior ISA is a good way to start saving for your child’s future.
What is a Junior ISA?
A Junior ISA (also called a JISA) is a type of savings or investment account designed for under 18s. Like other ISAs, a Junior ISA is a tax-free account. It needs to be set up by any adult on behalf of a child, so is best suited to people looking to build up savings for a child they care for. The money that is deposited cannot be withdrawn until the child named on the account turns 18. At this point the account will become a standard ISA and the money will belong to them, so the person paying in will lose access to the cash once it is deposited.
There is a limit on how much you can pay into an ISA over a tax year. For Junior ISAs, the limit for this tax year is £9,000, though this can be divided between two different types of JISA: a Cash Junior ISA and a Stocks and Shares Junior ISA.
What is Beanstalk?
Beanstalk* is an app-based service that claims to modernise saving for the future. Its main focus is on empowering adults to save up a pot of money for a child. This is done through the Beanstalk app, which allows multiple people to pay into a Stocks and Shares Junior ISA on behalf of a particular child. The general idea is that an adult will open a Beanstalk Junior ISA for their child, then they and other family members can make contributions to the savings pot through the app.
The app was created by KidStart, which is a ‘shopping club’ aimed at parents and legal guardians that pays cashback to kids whenever the adult spends money in certain shops. This service is incorporated into the Beanstalk app as users can earn cashback on shopping and round up purchases to make more deposits to the JISA, if they allow Beanstalk access to their bank account.
Beanstalk is not a bank, so there is no physical branch for you to visit to pay in cash or speak to staff.
How does the Beanstalk app work?
Users can open and manage the Junior ISA through the Beanstalk app. Parents or legal guardians can use the app to manage multiple JISAs if they have opened separate accounts for multiple children. They could also manage their own Beanstalk standard Stocks and Shares ISA for adults from the app.
You can check the account balance, top up the balance or set up a regular savings plan through the app. This applies to any account you have set up with Beanstalk. Users do not need to meet any minimum deposit requirements or set up a direct debit to pay into the Junior ISA.
Deposits can also be made through other people – such as the child’s grandparents or friends of the parents – who link to the account through an invite via the app. The person you invite can then download the Beanstalk app themselves and make contributions to the Junior ISA you have set up. A gifting page can also be set up for a child so that friends and family can send money as a present for a birthday or other celebration. There is a feature for the people you invite to send you messages through the app too.
Beanstalk offers a Junior Stocks and Shares ISA and a standard Stocks and Shares ISA for adults. There is not currently a Cash ISA or Junior Cash ISA option. A Stocks and Shares ISA does not come with a fixed interest rate and the return the child will receive on the money deposited will depend on the performance of the shares and funds the cash is invested into. This means that the amount in the account can go down as well as up.
There are only two funds to invest in through the Beanstalk Junior ISA, so if you are looking to grow a child’s savings through flexible investing, this may not be the right option. Other providers will offer greater flexibility and variety when it comes to investing, but that might be at the cost of other features.
The two fund choices include the Legal and General Cash Trust fund and the Fidelity Global Index Fund and investors can choose the right mix of the two funds using a sliding tool within the app.
The main draw of a Beanstalk Junior ISA is the app, which simplifies paying into the Junior ISA. Any adult invited to join by the account holder can download the app and make contributions. They can even include messages, for example to show that the payment is the child’s birthday gift. Other features include being able to round up certain payments to make small deposits, earning cashback on some spending and not needing to make regular or minimum contributions.
Beanstalk charges an annual fee of 0.5% of the total value of your Junior ISA pot, plus management fees of between 0.12% and 0.15% for the funds it offers. This means that the more money in the account, the more you will need to pay as an annual fee. It is a competitive fee, especially when compared to some Stocks and Shares JISAs offered by high street banks. However, it is not the cheapest investment platform on the market. There are lower-cost options with some major players, including Hargreaves Lansdown and Vanguard. Check out our 'Best Junior Stocks and Shares ISA' for more information.
The app itself is free to download, so you will not be charged until you start investing.
How to open a Junior ISA with Beanstalk
Setting up an account with Beanstalk* and opening a Junior ISA is a quick and simple process, which can be completed almost entirely online. Beanstalk uses an electronic verification system to confirm your identity, but in some instances, a customer may need to provide a copy of their driving licence, passport or a bank statement to prove their identity or confirm their address.
Once you are registered, Beanstalk will provide you with a link to send to any friends or family you would like to contribute to the account. The recipient will then need to download the Beanstalk app onto their own device and register.
The process can be broken down into these main steps.
- Download the app* (it is available on the Google Play Store and the Apple App Store)
- Complete the profile set-up (you will need to provide your name, date of birth and address)
- Confirm who you are saving for (this could be for one or multiple children)
- Choose which fund you would like your savings invested with
- Share your invite link so friends and family can invest too
Are your Junior ISA savings safe with Beanstalk?
Even though Beanstalk is not a bank, it is still FCA (Financial Conduct Authority) regulated as an investment platform provider. This means that the money in a Junior ISA account is covered up to £85,000 by the Financial Services Compensation Scheme (FSCS).
Be aware that this protection does not apply if your account loses money because of poor investment performance. Investments can go up or down and profit is not guaranteed, so you should take this into account before you invest money through a Junior ISA.
Transferring other investments to Beanstalk
You can usually move existing investments over to Beanstalk, though the transfer cannot be completed online. When you set up your Junior ISA, Beanstalk will ask if you have a JISA or trust fund you would like to move over as part of the process. You will need to fill out a transfer authorisation form and send it to FREEPOST KIDSTART. Keep in mind that the full transfer can take up to 3 weeks to complete.
Beanstalk customer service
Beanstalk does not offer either a customer phone line or live chat function. This means that communication can be a slow process. You will need to email Beanstalk in order to get in touch with customer services, though Beanstalk has claimed someone will reply within one working day.
This may not be much of an issue for a lot of customers, but some may find the inability to pick up the phone and call Beanstalk to be a red flag.
Pros and cons of the Beanstalk Junior ISA
- There is no minimum contribution amount
- Extended family can help build savings for a child
- No regular payment required
- Make deposits through rounding up certain spending
- User-friendly and well-reviewed app makes paying in simple
- 0.5% fees similar to other major Stocks and Shares JISA providers
- There are cheaper Junior ISAs available
- Customer services can only be reached by email, not over the phone
- No physical branch
- No cash deposits
- The investment options available are relatively limited
- There is no ethical investing option
- No Cash Junior ISA option
Beanstalk Junior ISA customer reviews
The Beanstalk app is available on Apple’s App Store and Google’s Play Store, with both platforms featuring mostly positive reviews. The App Store has over 350 reviews averaging 4.5 out of 5.0 stars. The stats on the Play Store are equally as impressive at 4.3 out of 5.0 from over 160 reviews.
This suggests the vast majority of Beanstalk users are happy with the app, though the reviews do not necessarily reflect the performance of the whole platform. However, as the app is such a key part of the Beanstalk Junior ISA offer, this can be taken as a significant plus point.
Is Beanstalk any good?
Beanstalk* is easy to set up and use, so could be a great way to start saving up for a child. The fees are competitive, even if they are not the lowest on the market, though the range of funds are limited.
It may not be the right option for an experienced investor, but Beanstalk could be a simple way for beginners to start building a really useful savings pot for their child to spend in the future.
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