Children lose out on Lloyds rate changes

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LLOYDS BANK is introducing tiered interest rates on its Headway account for young people and Young Savers children's account, which will mean that all but the rich kids will be worse off, writes Vivien Goldsmith.

On the Headway account, designed for teenagers, anyone with less than pounds 250 in their account will be a loser.

The account used to pay a flat rate of 5.5 per cent gross (4.13 per cent net). But from Monday a tiered structure will mean that those with less than pounds 50 in the account will receive interest of just 1 per cent (0.75 per cent net). This rises to 3.64 per cent when the account reaches pounds 50, 4.6 per cent on balances of over pounds 100, 6.03 per cent on pounds 250 plus and a top rate of 6.97 per cent on sums over pounds 500.

A spokesman for Lloyds said the new rates were being introduced to provide an incentive for young people to save. He added that it would cost the bank money. The bank is also changing the rate bands on the Young Savers Account, designed for children up to their teens, which will mean that those with less than pounds 50 will suffer a drop in the interest rate.

This account used to pay just two rates - 3.44 per cent gross on sums below pounds 500 and 6.97 per cent on larger sums. This is being changed to five bands starting at just 1 per cent for sums under pounds 50.

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