Being a student is wonderful; everyone loves you, including the bank manager who starts drooling with excitement at the prospect of your future earnings. Those first couple of weeks, after everyone finds out that you’re off to university, that’s when it all starts. Financial institutions will send endless letters of appreciation, valued customer this, special discount that. Eager to gain your custom, these institutions will do anything to get you through their doors from 0% overdrafts to freebies.

Fresher’s week can be equally fruitful. During my first week at university I went home with bags full of free goodies, one bank even gave me a free blow up chair just for signing up for a credit card and the friendly man handing out the chairs gave me two because I had a nice smile. I’m sure I am the only person that got two that day.

But as the chairs deflated so did my bubble of excitement for all the credit cards, student overdrafts and every other form of credit that I had taken out because they smiled at me, told me I was special and gave me some useless free item. I didn’t stop for a second to look at the rates, didn’t think for a minute how much I would be paying back, nor did I take full advantage of all the deals and more valuable and useful freebies that were on offer.

Student Accounts

Choosing the right student account is very important, some of the banks that offer these accounts are:

• Santander (Abbey)
• Barclays
• Co-operative Bank
• Halifax/Bank of Scotland
• HSBC
• Lloyds TSB
• NatWest
• Royal Bank of Scotland

All student accounts offer overdrafts, which allow you to withdraw more cash than you’ve put in. Because of the amount of debt the average student will incur whilst at university, it is important to consider the overdraft interest rates and limits and how much you will have to pay to take out this extra money. Look at the banks that offer the lowest rates and the longest 0% overdraft facility. The lower the rate is, the less you will have to pay back.

Once battle has commenced between the banks, you will find a number of different accounts offering similar overdraft facilities and rates. This is when the freebies help to sway you one way or another; take advantage of this, get what you can out of them and take the time to look at what’s on offer while studying, because once you have finished you will be able to upgrade to the best graduate account and eventually the best bank account.

As so many banks offer freebies, it would not be unusual if you were to start wondering whether you were able to open more than one student account. However, many of the banks will want you to commit to theirs by asking that you deposit your student loan and/or main income into that account.



Eligibility Criteria

• You must be a permanent resident in the UK
• In full time education and studying for a degree/degree equivalent or a post graduate course
• Over 18 in full time education. 17 year-olds can apply, but they will not receive credit facilities until they turn 18
• A university or UCAS confirmation letter is needed.

Things to remember:

• It is important to educate yourself on borrowing before you do it; borrowing money is very serious and can be dangerous if not handled properly.
• Try not to go above the agreed limit without first obtaining permission from your bank. If you don’t you will be laden with crippling interest rates and penalties, which can affect your credit rating.
• Never borrow more money than you need, you will have to pay it back once you have graduated. It is important to budget.
• You will be credit scored as you would be were you applying for any other loan. The bank will use this to determine how desirable a customer you are, however for many students there will be little information available on you, meaning you may be rejected.
• Do not count any money borrowed as part of your income because again once you graduate your 0% overdraft jumps to the high commercial rates.
• Don’t just go for the bank that is closest to you as most banks offer online access and free cash machine withdrawals, look at what the account has to offer.

To compare the different accounts available to you have a look at myfinances.co.uk. There you will be able to look at the cheapest student accounts and find one that is right for you. Here is a list of some other useful websites where you can read up on the pros and cons of student accounts and the things to look out for before signing up.

www.myfinances.co.uk/types/bank-accounts/student-compare-student-bank-accounts-$457164.htm

www.moneysupermarket.com

www.moneyfacts.co.uk/money/currentaccounts/3/banking_stud_accounts.aspx

www.moneysavingexpert.com

Student Banking...
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