Kent Reliance is offering a new variable rate cash ISA for the under-25s paying 6.26%. Existing KRBS Direct ISA savers who are under the age of 25 will be transferred into the new account automatically and need do nothing to obtain the higher rate. Other savers wanting to transfer in to the KRBS are welcome.

Savers over the age of 16 are allowed to place up to £3,600 in a cash ISA in the current tax year. Stocks and shares ISAs may only be held by the over 18s.

Once the saver turns 25 he or she will be able to continue to add to the account up to the maximum £3,600 in that tax year at the higher rate but after that will be offered an alternative ISA product.

KRBS’s ordinary postal ISA savers over the age of 25 currently receive 5.76%. 

Under-25  savers who prefer a branch-based account can have a passbook ISA account offering 5.76%

Mike Lazenby, chief executive of Kent Reliance said, "The young adult market needs all the help they can get with their finances –  but  they do demand transparency and flexibility. If they can open a tax-free account with as little as £1, achieve a top level of interest and still have the capacity to withdraw money withno  notice  periods,  then  we  are some way to meeting these needs.

"Better still, if we can encourage them to start saving early and deliver a competitive return on their investment then we can help to establish a good habit as well as opening up financial possibilities.

"In  today’s market, where many young people can only dream, for instance, of a  first  step  on  the housing ladder, this competitive product offers the potential of a good return of investment, with  the  option  of  either  transferring large sums from an existing ISA provider   or  of  opening  a  new  easy  access  postal  account  with  no restrictions."

The current Best Buy cash ISA on the market without an age restriction,  according to data provider Moneyfacts, is  Manchester Building Society's Premer ISA Issue 2, paying a fixed rate of 6.5% including a 1% bonus until 31 October 2009 for a minimum deposit of £1,000.

Compare all savings rates here

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