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Students told to take care with their finances

Students told to take care with their finances

Category: Banking

Updated: 14/12/2012
First Published: 18/07/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Students in the process of preparing to leave home and head off to university have been urged to consider the merits of student accounts.

Moneyfacts.co.uk points out that for many it will be the first time they are fully in charge of their finances, with budgeting and bill-paying all of a sudden under their control.

With the anticipated increase to course fees, and student debt therefore set to become an even bigger problem, students have been told it is definitely worth putting in some time and effort to find the most suitable student account for their needs.

Michelle Slade, spokesperson for Moneyfacts.co.uk, said that with most students likely to spend their university life living in their overdraft, it is worth finding an account that offers a good interest free overdraft.

"Inevitably, many will need to exceed this limit, so it's important to check the charges additional authorised borrowing can incur," she added.

" Halifax offers an interest free overdraft of up to £3,000 from year one, which is the most generous in the market."

Ms Slade also points out that many other accounts offer a tiered system, with the level of interest free borrowing increasing each year and the high level only available in years four or five.

She adds that it is also worth bearing in mind that some of the higher overdraft limits are quoted as 'up to', meaning that the level of overdraft offered will be credit scored and those who don't fully match up to their criteria may be offered a lower limit.

Ms Slade goes on to explain how many banks offer incentives to students to try and tempt them into choosing their account, but warns these should be seen as a perk and not the reason for selecting the account.

"While discount offers and cinema tickets may have short term appeal, you could end up paying for them twice over with a higher overdraft rate," she cautions.

Students have also been told to tread carefully when borrowing on a credit card, as although credit limits offered to those in higher education are small, the lack of a regular income to repay the debt means interest charges can quickly escalate.

"If you do get into trouble with your finances, don't bury your head in the sand," advises Ms Slade.

"Unauthorised borrowing can be very expensive and soon mounts up. If you tackle any issue head on, the bank will be more lenient and willing to help.

"Many branches at or near universities also offer a specialist advice service, which can be invaluable in helping you manage your money."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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