Best Youth Account 2014
Teenagers who are starting to earn - and spend - their own money will start needing more from their savings account. In addition to a decent rate of interest on money they are saving, they will also want to be able to access their spending money with a cash card.
For the second year in a row, the winner is the Santander 11-15 account, which pays 3% AER on balances up to £500. Requiring all account holders to pay something into the account each month - even if it's only £1 - encourages youngsters to bank some of their cash. "Although this is a current account, it pays a really good rate of interest, so is like a savings account," says judge Anna Bowes, director of Savingschampion.co.uk. We simply cannot ignore an account that offers a debit or cash card while paying such a competitive rate."
Yorkshire Building Society's Freedom Account takes the runner-up position, paying 1.75% AER. "This is simply the account paying the best rate after Santander, with a cash card," she adds, "and the rate has remained unaltered for many years."
Best youth account 2014
11-15 Current Account
Current rate: 3% AER up to £500
Age range: 11-15
Other features: cash card, online and mobile banking
Notes: Must pay some money into the account every month
Contact: 0845 609 0014
HIGHLY COMMENDED: YORKSHIRE BUILDING SOCIETY FREEDOM ACCOUNT
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.