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Student finance – make sure you choose wisely

Student finance – make sure you choose wisely

Category: Students

Updated: 14/08/2015
First Published: 12/08/2015

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 It is now over 6 months old so the content may be out of date.

Within the next month many students will be heading to university, and for some this could be the first time they will live away from home and be solely in charge of their own money.

It's easy to forget about that aspect in the excitement and hype of the new semester, but as a new chapter in their lives begins, students need to make sure they learn how to manage their finances throughout their further education – fail to do so, and you could have a mountain of debt as well as the real world to contend with once your course comes to an end!

So, just how can you make sure you're prepared? One of the best starting points is picking a good student bank account. Weighing up the various student accounts on offer right now would be wise – you haven't got long to decide, after all – but choosing the best one might not be as simple as it seems.

Overdraft ideals

The thing you need to be particularly wary of is the overdraft. Yes, you'll probably need an overdraft facility to help balance the books and fund your studies – that student loan doesn't always go very far, after all – but you don't want to rely on it too fully or be left with a huge amount to pay off at the end of your university life.

"Student accounts are a necessary evil because those studying will need all the help they can get to manage their money throughout their course, so a sizeable overdraft facility will be a top priority for many," said Rachel Springall, finance expert at "However, while this is a handy cash injection, using it to its fullest will always be an easy temptation.

"There is a danger of racking up a significant overdraft and being unprepared when the time comes to pay it back, which is why students should do everything in their power to use it sparingly and do their best to earn additional income to reduce what they owe."

Resisting temptation

Then there are the incentives. Again, it can be all-too easy to be tempted by the eye-catching treats on offer, but these should never be seen as the be all and end all of an account. There are many more things you need to think about, such as the overdraft amount and the charges levied should you dip into an unauthorised overdraft, so reading the small print is essential.

"These accounts are well renowned for their enticing incentives, such as shopping discount cards, railcards or coach cards that save money on journeys," added Rachel. "While these can prove useful to those who would frequently utilise the benefits, choosing an account based solely on the incentive can mean being stuck with a less attractive overdraft in the process.

"Currently, the best interest-free overdraft facility on offer is a whopping £3,000 from HSBC and Halifax, while other accounts will tier the amount lent across the years of study, which can be a more sensible option for some. It's also worth keeping in mind that getting a sizeable interest-free overdraft facility is never a guarantee, and as with any bank account, customers will be credit scored."

Some students may even be tempted to choose a bank solely because it's on campus, but as Rachel points out, this isn't necessarily needed in this day and age: "Bank branches on campus may sway students to pick them for their day-to-day banking needs out of convenience, but the digital age means it's so easy to manage finances on the go that a nearby bank branch shouldn't be the final deciding factor."

As you can see, there's a lot to think about! It's important to base your decision on a variety of different factors, from the amount of overdraft you'll need to their online banking facilities and, to a lesser extent, the incentives on offer. So, do your research over the summer break and you can start your course with the perfect account by your side.

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.