With the new academic year on our doorstep, we’ve been busy putting together a number of different guides to help students get to grips with their new responsibilities.
Next up on our list is choosing the right student account!
We know it can be confusing and stressful to choose the right student account as they offer different perks so if you’re not sure how to pick, read on!
- You’re the intended target!
Firstly and most importantly, remember that a bank wants you to choose them. Banks actively target students with the aim of creating loyalty so that once you graduate, you’ll continue to bank with them.
Loyalty is not necessary here – if you find a better deal then do consider switching banks, this may be hassle to begin with but could benefit you significantly in the long term.
- Find out your credit score
Although this may not be essential at this stage, it is worth being aware of your credit score. This will not only help you understand how your rating changes during your time at university but also can give an indication in to how risk the bank may consider you to be.
The overdraft amount that you are given is likely to depend on your credit score.
- Choose your overdraft carefully
A common way of borrowing money through your current account is through an arranged overdraft. Money borrowed in this way has 0% interest meaning you pay back only what you borrowed. Student accounts are unique in this way so take advantage while you can!
But be aware! Interest charges do set in a certain number of years after you graduate. Also, make sure you never go over your overdraft limit because you could be hit with hefty charges. Talk to your bank if you’re close to the limit as they may be able to offer you an extension.
Ideally, you should only go in to your overdraft in emergencies so try not to become overly reliant on it!
- How much of an overdraft will you get?
Most often, the advertised student overdraft limit is the maximum that you could get and this is usually available in your final year at university and only if you have a decent credit rating, so avoid these top mistakes that could ruin your credit score while you’re at uni!
Many high street banks offer an overdraft up to £3,000. However, remember that while it’s easy to spend that amount of money, it’s a lot harder to pay back.
- Understand the repayment conditions
Be aware of when you need to repay your student overdraft by as you don’t want to face the sudden prospect of paying £3,000. Your student account will most often be automatically turned in to a graduate account by your bank once you graduate.
- Don’t be pulled in by flashy offers!
Although short term offers such as free products, insurance, cashback rewards or other exclusive deals may seem very attractive, it is important that you consider the pros and cons of each. Wouldn’t it be better to get a large interest free overdraft for the entire time of your university degree than to get an Amazon gift card? We think so too!
- Does location matter?
Although a bank close to you can be convenient if you need cash, this should not be your main concern because remember that you can withdraw money for free from many ATMs and the prevalence of internet banking means that most things can be done without venturing outside!
While we hope you now have a better idea on how to choose the best student bank account for you, why not check out our other guides to help make your transition to university easier?
- Top tips for students moving out for university this September!
- The Student Guide to Renting!
- The Student Guide to Paying the Bills!
When you’re going to university with your most valuable possessions, we know how devastating it can be for something to happen to these so protect your contents with our specific Student Contents Insurance today! Quote online or call 0800 294 4522!