Banks love students, and it’s proven that you’re likely to stick with the bank you choose as a student for life. The banks know that you need them to help with your student money situations,
so they offer you freebies and financial incentives to try and entice you.
However, the banks require you too, so make sure you do your research and make wise decisions to make your bank account work harder.
University can leave students with mounting debt and the constant worry of how you are going to pay fees,
buy equipment, and generally live. And having a huge free overdraft or the offer of low-interest loans and credit cards can be a real temptation, but in most cases, unnecessary. Just because it’s free, or a good deal, doesn’t mean that you need the money.
With some sensible budgeting and money tips from the bank, you should be able to get by with a basic student account without the bottomless overdraft! However,
If you do need that little bit of extra help, then your student years are the best time to accept finance from the bank, but be sensible with it and don’t let the £’s fritter away.
You need to decide precisely what you want out of a student bank account to make the bank account work harder for you. But don’t let the basis of your decision revolve around the nearest branch to your campus, loads of freebies, or a big overdraft.
Here’s a summary of what you need to be looking for:
The in-credit interest rate
The interest rate is the amount of extra money you can earn whilst your money is in the account. To make as much as possible, you need to choose a statement with the best (i.e., the highest) interest rate.
This only applies to you if you are going to be in credit for the majority of your time at university. However, if you intend to live off your overdraft, it’s not worth worrying about.
Overdraft limits and charges
An overdraft is extra money you can borrow from your bank without organizing a formal loan agreement, and there is no monthly payback amount. Student accounts frequently offer interest-free overdrafts where you don’t have to pay for the amount you borrow.
Nevertheless, you must make sure you understand all the terms and conditions relating to overdrafts from your bank as if you go over your agreed limit by even a few pence; you will have a hefty charge to pay.
It’s worth having a chat with your bank manager and finding out what happens to your student account once you graduate, however, don’t think that you will have at least three years to think about it,
the way they deal with your student money at the end may need to be taken into attention when deciding on a suitable bank. You need to look out at their policies on reducing the free overdraft allowance; some take it away immediately while others do it gradually month by month.
The same applies to the exclusive rates that you will get on credit cards and loans; you need to make sure that payback rates won’t double as soon as you leave university.
A graduate account may be offered to you, which is a mixture of a student and current account; you will have to pay interest on overdrafts and a higher rate on your credit cards and loans, but it won’t be as much as a standard current account.
To entice you, most banks will offer gifts and special offers. However, although they are excellent, and many will be real luxury items such as laptops or mobile phones,
they are the least important part of a bank account. The interest rate and overdraft facilities are much more critical. Don’t let the freebie affect your judgment!
To make your bank account work harder, you need to consider all of these points and make sure that your student money is sitting in a bank that ticks all the boxes, not just some!