The Future Savers scheme, launched by Glasgow City Council last week, is the first of its kind in the UK. About 4,000 pupils will be eligible for an initial deposit of £10 from the local authority.
Over time, this will ensure that every young person in the city has access to a dependable, responsible option for savings and money advice, councillor and city treasurer Paul Rooney said.
It will also mean that, as adults, they will always have a better alternative to payday loans if they decide they need to borrow.
Mr Rooney launched the voluntary scheme at Lochend Community High in Easterhouse, where he met the first young Glaswegians to open Future Savers accounts. Every secondary school has been matched with a credit union and about 1,000 pupils have already applied to open an account under the initiative, dubbed Glasgow’s Starter for 10, a council spokesman said.
Some pupils and parents would probably decide not to open an account depending on their circumstances, but the financial education linked to the scheme will be part of the curriculum for everyone, he added.
“What we want to do with this project is give every young Glaswegian a safe and secure relationship with a credit union that is responsible to its members and to its community,” Mr Rooney said.
“Straightaway, they will start to learn about managing money and will have the opportunity to save.
“And if, years from now, they decide they need to borrow, they will also have access to a lender that knows them well and will help them – rather than simply see them as an opportunity to turn a profit.”
About 100,000 residents in the city are regularly using non-standard forms of credit, according to research carried out by the council last year.
Future Savers has been set up after a cross-party group investigated the extent and impact of payday loans in the city. It proposed a range of actions for all levels of government.
Members are also lobbying Westminster and Holyrood to reform how lenders are allowed to operate – and to give local authorities greater planning powers to prevent high-cost lenders from swamping local high streets.
The council is offering incentives to credit unions to be more visible in their communities, including rent subsidies and rates relief. Glasgow is already recognised as the country’s credit union capital, with one in every six UK accounts held in the city.