Kids sent to Coventry to get saving
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Your support makes all the difference.Persuading teenagers to save, rather than spend, their pocket money or the wage from a part-time job is no mean feat.
But the challenge has been embraced by Coventry building society, with last week's launch of an instant access savings account for 11- to 17-year-olds. This offers 4.25 per cent on balances of £20 to £5,000.
Young savers with the "Intro" account will also receive a cash card that allows withdrawals of up to £100 per day and can be used to top up pay-as-you-go mobile phones.
Coventry said the account was designed to help teenagers manage their money. "This is particularly important as new personal finance qualifications are being introduced in schools and colleges to help address low levels of financial understanding," said Coventry spokesman Colin Franklin.
Sue Hannums of independent financial adviser (IFA) Chase de Vere says that, while not offering a "jaw-dropping rate", Intro offers more interest than many current accounts for teenagers. Some of these pay as little as 0.1 per cent.
Rachel Thrussell of financial analyst Moneyfacts says Intro is "not particularly innovative" but adds that it is a "straightforward account with a straightforward rate".
Banks and building societies, she stresses, are stepping up their drive for the teenage pound. "They are going for the younger market so they can cross-sell other products, such as current accounts, mortgages and insurance, when they get older."
But she urges teenagers not to be enticed by the "gimmicks" on offer - in the case of Intro, £15 of Virgin vouchers - as there are better rates elsewhere on instant access accounts.
She picks out the Ready Steady Save account from Chelsea building society, paying 4.85 per cent on £1 for people aged up to 15. The Save4it account from the Halifax, meanwhile, pays 4.8 per cent on balances of £1 until you're 16.
Ms Thrussell also likes the Ladybird account from Saffron Walden building society - with 4.9 per cent on offer - and Loughborough building society's Penguin account paying 4.85 per cent.
To make sure interest earnt by the child's account does not have tax deducted, parents must fill in and hand over the R85 form. Available from banks, building societies and tax offices, this can also be downloaded from the Revenue & Customs website: www.hmrc.gov.uk.
Once a child turns 16, they can still qualify for tax-free interest for another two years as long as they are in full-time education.
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