Choosing the right Student Bank Account

Category: Students

Student accounts will undoubtably be at top of your priority list if you're off to university or college this year, second only perhaps to selecting the place where you'd like to study. Banks know this only too well and will be ready to bombard you with their student account offers.

Even before the ink has dried on your A-Level certificates, expect to be targeted by the big banks to take out one of their student accounts. Is it any wonder? The future earnings and savings potential that graduates have means that you're hot property and they'll be fighting for your custom.

But before you choose a student bank account, you should plan ahead rather than waiting till the last minute when you'll have much more on your mind. If you compare student accounts currently available before you sign on the dotted line, it could save you a small fortune over the duration of your course.

The ins and outs of student accounts:

A whole range of banks and building societies offer student accounts, which are just like normal current accounts, except they come with different terms and conditions. So if you're planning on going to university this year, make the most of being courted by the big banks, and shop around for the best deal. Whether it's an interest free overdraft, internet access or a handy incentive, you could even get an account before your A-level results day and enjoy a couple of months of perks before you start your student life!

Before you open a student account:

• Think about how you want to operate your account? The majority of student accounts have Internet access so you can manage your money easily on a day-to-day basis. This can be very convenient if the only time you dare venture outside is to go to a lecture (or the pub!).
• Then think about how you intend to access your cash? Is there a cash machine on campus for withdrawals?
• If a branch is important, do some research about how close the nearest branch is to you. If you ever have an emergency with your finances, you'll thank yourself in the future.
• Most banks in the UK often offer a basic overdraft facility, but with student accounts this can vary significantly. Make sure you check how much interest-free overdraft is available (which is how much you can go into the red without being charged), this can mean the difference between financial comfort and financial hardship, and so you need to get this right!
• Then look at the charges you are likely to face if you go beyond the interest-free part of your overdraft limit. But also remember to check what you'll be charged if you exceed this – unauthorised overdraft charges can be particularly punishing.
• Also think about if your account comes with a credit card. If it used correctly can be a great help, especially when student loan payments are staggered throughout the year. So take some time to look into the different interest rates charged on credit cards. With the recent launch of prepaid cards its worth taking a look at whether these will limit your spending helping you stay in the black.
  

Things to watch out for on your student account:

• Freebies – this cannot be emphasised enough because many banks think they can bribe students with free gifts. Whilst a new iPod will may make you smile now, you'll be kicking yourself in the future if you need a bigger overdraft for example. A discounted holiday and a couple of weeks in the sun may seem like a great idea before you start studying, but a young person's railcard can save you a small fortune if you ever need to travel home. The message is clear – make sure you weigh up the benefits first and pick an account that suits your longer-term financial needs, rather than one purely based on a free gift.
• Some student bank or building society accounts will also revert back to their standard current account as soon as you graduate. If like the majority of graduates you are overdrawn and in debt, you could find yourself in even more financial trouble.
• If you do find yourself in financial difficulties, you won't be the only one. Don't bury your head in the sand, as it will only make things worse. Many banks on campus will have a student finance officer that you can speak to. Make the most of this free service - it will help you stop worrying about money and let you concentrate on your studies.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.