Written by Editor, Graduate Prospects, November 2011
An increase in tuition fees and the rising cost of everything from a house to a pint a milk means watching your pennies is important. Choosing the right bank account at the start of the year can help with this but what’s on offer?
To find out exactly what’s going on at the banks you should start by researching a few on the internet to get a feel for what’s out there. Then head into the banks where there will be all sorts of booklets for you to read. You could also set up a meeting with an adviser to talk through your options.
Many students stay with the bank that they have been with from childhood and while this might be easier in terms of paperwork and transferring your money, you could be missing out on the benefits that a shiny new account has to offer.
Unless you were lucky enough to win the lottery it is likely that you will go into your overdraft while at university. For this reason you need to get yourself an account that has a good level interest free.
In an ideal world you’d live within your means and your overdraft would be sufficient however many students will require more than their limit and so it is important to look into any charges that will be payable on additional borrowing. Find out more about managing debt.
‘Halifax continues to offer the highest level of interest free overdraft of up to £3,000 from year one. Many other accounts offer a tiered system, with the level of interest free borrowing increasing each year and the highest level only available in years four or five,’ says Michelle Slade, spokesperson for Moneyfacts.co.uk
Getting an overdraft is not as easy as walking into your bank and asking for the biggest they’ve got, as Michelle points out. ‘It is also worth bearing in mind that some of the higher overdraft limits are quoted as ‘up to’. The level of overdraft offered will be credit scored and if you don’t fully match up to their criteria, you may be offered a lower limit.
Everyone likes getting something for free and the banks certainly like to offer incentives to get you to sign on the dotted line. Across the banks these include discounted laptops and gadgets, cheap insurance, traveller’s cheques and rail cards.
‘Many banks offer incentives to students to try and tempt them into choosing their account, but these should be a perk and not the reason for selecting the account. While discount offers and cinema tickets may seem tempting, you may end up paying for them twice over with a higher overdraft rate,’ warns Michelle.
Michelle offers her advice for choosing the right bank account and keeping on top of your finances.
‘Many students will receive their grants as a lump sum at the start of each semester. It is worth setting yourself a weekly budget to ensure that you continue to have money to live on throughout the term.
‘If you do get into trouble with your finances, don’t bury your head in the sand. 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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