Credit card launched that saves for university

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The Independent Online

A new loyalty card is launched today, aimed at saving money for children to go to university. The Children's Mutual friendly society, Lloyds TSB's Accucard credit card, Bank of Scotland and iPledge, a financial adviser, have come together under the iPledge banner to produce estimated savings of thousands of pounds.

For every £100 spend on the iPledge credit card, holders receive 80p in a linked deposit account provided by Bank of Scotland and administered by Children's Mutual. That account pays 4.07 per cent AER (4 per cent gross) a year at the moment, but it will vary with Bank of England base rate. The iPledge credit card cashback is paid into that account annually and after the anniversary of opening the credit card.

Leading online retail brands, including Dixons, Currys and Boots, have joined the scheme so that cardholders can shop through www.ipledge.co.uk. They will receive additional savings of about three per cent on the price of orders, which will be credited to the deposit account every six months from 31 December this year.

Chris Davies, iPledge's chairman, said: "We are working with some of the UK's top brands to help parents save for their kids' future without changing their spending habits. The new credit card and deposit account will help parents on the way to saving in advance for their children's university costs rather than waiting until bills start to drop on their doormat. According to new research, only 12 per cent of British parents are saving up to pay for their children's university education."

Mr Davies estimates that if two people use the iPledge credit card, they could save £3,323 over 21 years. This tops the £3,000 a year in university tuition fees which students will soon face, on top of living expenses. based on the earnings and spending of the average parent and grandparent whose children go to university.

The saving of £3,323 is based on the assumption that savings would grow at 2.5 per cent a year after tax and that cardholders would devote a quarter of their spending to shopping online through iPledge's website. More than 370,000 students are accepted for higher education courses each year.

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