One of the most important decisions any student has to make is which student bank account they’re going to open. A lot of students tend to stick with their current bank but this is a big mistake because there are almost always better alternatives out there. Here are some of the different points you need to look out for when choosing a student bank account:
- Is a 0% overdraft included in the account? If so, is that overdraft a guaranteed amount, or an “up to” amount?
- If an overdraft is offered, is it tiered, or is it one lump sum?
- What other perks are offered with the account? Some banks offer webcams as a deal sweetener, whilst one bank even offers a free student rail card.
- How close is your nearest branch?
- Is online banking an option?
It’s really up to you to do your research to find the best student bank account for you. It’s a good idea to have a look on comparison websites, but just remember that a lot of the time the information they provide is outdated. Student bank accounts change year on year, so you might not necessarily get the same deal as what the bank was offering last year.
Why is a 0% overdraft so important?
A 0% overdraft is really important because it’s basically a free form of borrowing. Some students find living within the means of their student finance to be a bit tricky at first, so it’s nice to have that financial safety net there just in case you need it. If you do dip into your overdraft make every effort to pay it off, even though it’s not costing you anything. When you do graduate that overdraft will remain and you’ll have to pay it off somehow – remember an overdraft isn’t free money, it’s free borrowing (for a period).
The deciding factor when looking for a current account should be the overdraft. There’s no use going for a student account because you get some awesome free gift if there’s no 0% overdraft. If you find two banks offering the same 0% overdraft deal that’s when you can take the free gifts into account as a deal breaker.
One of our top tips for students is to look for a graduate account after they’ve finished studies. A graduate account can often give you an extra couple of years of a 0% overdraft, allowing you to pay off the outstanding sum without paying interest on it. A lot of banks offer a tiered system where the 0% figure is reduced annually, allowing you to pay it off gradually.
Simply by switching bank for a student account you can save a lot of money on overdraft charges – so it makes sense to shop around. Remember if you go over your agreed overdraft limit either as a student or later in life, you can expect to be hit with high penalty fees!
For lots more useful information about student banking, loans, money saving and job-hunting tips make sure you check out StudentMoney.co.uk.
