Starting life as a student is all about big decisions: where to live, who to befriend, what to eat; there’s an awful lot to consider.
Much is new, and it can all seem rather daunting, but be prepared, don’t attempt to tackle it all at once, and you’ll soon realise that there’s no hurdle that cannot be overcome.
Choosing the right student bank account ranks amongst the most important decisions for those arriving at university, but although all the options and alternatives can seem a little overwhelming at first, our general advice still stands.
Take a little time, do a little research, be prepared and you’ll soon have everything in place and your finances in order. Read our mini guide to choosing the right student bank account and you’ll soon be able to tick this one off and move onto the next big decision that must be made.
It’s not all about the free stuff!
The freebies are tempting, this we understand. That the banks are desperate to get their hands on your money is obvious given the incentives on offer, but there’s a lot more to consider than short-term gains and carefully-calculated gimmicks.
Some joining incentives can be useful for students, with travel discounts (including free railcards) and cashback from selected High Street retailers amongst the perks most often on offer. Our advice is to look a little longer term and, whilst freebies might appear attractive, interest rates and overdraft options will offer the biggest benefits.
Have a good look at overdraft options
Speaking of overdrafts, you might think that these are much of a muchness, but do a little digging and you’ll soon realise that these do differ from bank to bank. Those with a standard bank account tend to incur eye-watering interest rates for using an overdraft, but pick a good student account and, as long as you stick to the rules and remain within the limits, you should be able to avoid additional costs.
This means that, to a certain extent, you can spend more than you have in your account and, as such, this is the most important consideration of all.
Don’t just join the first bank you can find. Do some research online, ask around and, to borrow a familiar phrase, go compare.
Overdrafts are not all the same so look at all the options and figure out what works best for you. Some overdrafts are tiered across your years of study, meaning you can access more money in your third year than you can in your first, whilst others will be consistent across the full period, but will expect a certain amount to be paid in per academic year. Take nothing for granted and always read the small print.
Banks don’t have to offer you a certain amount when it comes to an overdraft, but if it’s less than expected, please don’t panic.
Overdrafts offers are based upon evidence – credit scores and such – and although you might have hoped to get more, the final decision will be based upon sound financial principles. You can check your credit score online to find out where you stand, whilst simple steps can be taken to improve your chances at the bank. Ensure your address is up-to-date on all accounts, pay your bills on time and ensure you’re on the electoral register. To borrow another familiar phrase, every little helps!
Use it wisely…
Having an overdraft is a nice option, but make no mistake about it: this is not free money. To put it plainly, it’ll all need to be paid back in the long run.
Think of your overdraft as a safety net. It’s there if you need it, but in an ideal world, it’s not something that you’d choose to rely on. Some students need an overdraft, but others can manage without.
Take our advice on this one: if you don’t need to spend it, don’t. If you’re still overdrawn when your studies come to an end, the chances are the repayment rate will go through the roof.
And take interest in the interest
We get it: interest rates are not as interesting as overdrafts. But this isn’t one to overlook. Some student bank accounts offer 5% AER/gross interest on balances up to £500, for instance, so for those counting every penny, such things are worth consideration.
Customer service is another aspect that tends to be ignored, but it is worth bearing in mind. If the worst comes to the worst and you do find yourself in financial strife, how your bank handles such things will be of the utmost importance.