A student account will be included on your list of priorities if you are off to university or college this year. Banks know about this too well, and they will happily offer you a lot of options regarding student accounts. It comes as no surprise since the future earnings and savings potential that are possessed by graduates mean that you are hot property, and banks will be fighting for your custom.
When choosing a student bank account, you should plan ahead instead of waiting until the last minute, when you will have much more on your mind to think about. Analyzing student accounts before you put your signature on the dotted line could help you save a small fortune over the term of your course.
The ins and outs of student accounts:
Various banks and building societies offer student accounts. Student accounts are just like ordinary current accounts, except they come with slightly different terms and conditions. So if you are planning on entering university this year, take advantage of being courted by the big banks, and shop around for options to get the best deal. Pay attention to what is being offered – whether it is a railcard, a hardy incentive, or an interest-free overdraft. You could even acquire an account before your A-Level results day and experience some months of perks before starting with student life!
Before you open a student account:
- Plan regarding how you would want to operate your account. The majority of student accounts can be accessed and operated online so you can easily manage your money on a day-to-day basis. This can bring about much convenience for you especially if the only time that you dare go outside is to go to a lecture (or the pub!).
- Think about how you would want to access your cash. Does your campus have a cash machine to accommodate your withdrawals? If you want to visit a branch regularly, do some research regarding the distance of the nearest branch of your chosen university. You will thank yourself for this especially when you encounter an emergency with your finances.
- Most banks in the United Kingdom offer a basic overdraft facility. However, this can vary significantly with student accounts. Ensure that you check how much the available interest-free overdraft is (this is how much you can go into the red without additional charges). This can determine the separation between financial comfort and financial hardship, so you need to make sure that what you get this right!
- Analyze the charges that you are likely to encounter if you go beyond the part of your overdraft limit that is interest-free, as well as what you will be charged if you exceed the limit altogether. Overdraft charges that are unauthorised can be particularly punishing.
- Consider if your account comes with a credit card. If used correctly, a credit card can be of great help, especially when payments of student loans are staggered throughout the year. Take some time to examine the different interest rates charged on credit cards.
- You may also want to consider prepaid card as it is worth analysing at whether these will restrict your expenditures enough to help you stay in the black.
Things to watch out for with your student account:
- Freebies – many banks assume that they can easily bribe students with gifts and offers, so make sure to thoroughly examine your options and do not be persuaded by the lure of a good freebie. While a new iPhone may make you smile now, you will be kicking yourself in the future if you need a larger overdraft instead. If you happen to be going on holiday, a commission-free foreign currency will be very helpful for you, but your railcard can save you a small fortune if you constantly need to travel home. Make sure that you weigh up the benefits of your options first and choose an account that will suit your longer-term financial needs, rather than purely basing your decision on a free gift.
- Some student building society or bank accounts will go back to their standard current account as soon as you graduate. If you are like the majority of graduates that are overdrawn and in debt, you could find yourself in even further financial trouble, so ensure that you examine what the long-term overdraft or graduate facilities are like in your potential bank, too.
If you do realise that you are experiencing financial difficulties, you would not be the only one. But do not bury your head in the sand as it will only make things even worse – many banks on campus will have a student finance officer that you can talk to, so take advantage of this free service as it will help you stop worrying about money and let you concentrate on your studies.