At last young workers get a better deal

High-street banks may be fighting for our current account business, but one group of customers often overlooked is school-leavers heading straight into employment.

While university students are enticed with generous packages because they are seen as good business for the future, those who steer clear of higher education have not had access to services such as cards and overdrafts.

But with more and more people now shunning university because of financial fears, Alliance & Leicester says it is working to "recognise the needs" of this group with the launch tomorrow of the Premier 21 account for those aged 16 to 21.

With a minimum funding requirement of £250 a month, Premier 21 will pay a high rate of 10 per cent on balances in credit - although this is fixed only until July 2008.

You can only keep up to £1,000 in the account; go above this and the rate drops to just 0.1 per cent.

Account-holders aged 18 or over can also get access to an overdraft facility of at least £250, as well as a Visa debit card, subject to a credit rating.

Other features include a £10 "buffer zone", giving customers emergency access to the last few pounds in their account via a cash machine - even if their balance is slightly less.

Customers will be able to check their account online and over the phone, including via their mobiles. They will need internet access to view statements and manage the account.

"There is not much on the market for this group," says Sue Hannums of independent financial adviser (IFA) AWD Chase de Vere. "This is a really good account paying a fantastic rate, and a real challenge to the big four banks."

She adds that the nearest equivalent is the FlexAccount from Nationwide building society, paying 4.25 per cent. "But you have to fund this account with at least £1,000 a month or that rate drops away."

Mike Naylor at the price- comparison service uSwitch says A&L has "shaken up the market".

"It's refreshing to see a provider encouraging young people to get the best deal for both credit balances and overdrafts," he says. "But consumers should be aware that authorised overdrafts are subject to a monthly charge of £3 when utilised."

He adds that Premier 21 is "unique" in not issuing charges for transactions that do not have sufficient funds in the account to cover them. This, though, is slightly offset by the unauthorised overdraft. "Dip into this and you face a charge of £3 per day."