RESEARCH from Alliance & Leicester Current Accounts has revealed that an alarming number of young people have a big knowledge gap when it comes to savings.

Two two thirds (67%) of working 16 to 21-year-olds didn't know what ISA stood for and one in 10 (10%) had never even heard of one.

Despite the Government's attempts to help young people start saving from an early age, 15% of 16 to 21-year-olds said they didn't understand the new rules and regulations for ISA products. Sixteen per cent admitted they saved no money at all and nearly one in ten (9%) said they would rather spend money than put it away for a rainy day.

Having transparent, easy to understand products seems to be one of the most important issues that needs to be addressed, as nearly a fifth (18%) of working 16 to 21-year-olds thought the concept of an ISA was very confusing and one in 10 thought they were too complicated to understand.

Emma Walkley, of Alliance & Leicester, said: "Young people should be encouraged to start saving early to ensure their financial future is safe. ISAs are often the first step into the world of regular saving, with customers able to make use of tax free advantages without risk on any amount from £1.

"By offering everyone aged 16 or over a market-leading interest rate of 10%, we hope this will encourage younger people to bridge their knowledge gap, and whether they are working full-time, part-time or doing casual work, it will help make their hard-earned money work harder for them."

10:05am Thursday 27th March 2008

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