The last thing you want to be worrying about during Freshers’ Fortnight is your money, so know what you’re going to need and get it sorted as soon as possible. At university, you will require:
- A student bank account
- A debit card
- A credit card (optional)
The main reason you’ll want a student account, rather than a normal current account, is because you will be given an interest-free overdraft, which means you can spend more than the amount of money you actually have in your account, and pay it back (after you graduate) without interest. You’ll want to open this before the first part of your maintenance loan comes in, as the money will be paid directly into your bank account so you won’t really want to change your bank details afterwards. This can take a lot of time.
Student bank account comparisons
|Barclays||£2000||£200||Personalised debit card||10% discount on travel insurance and possessions insurance|
|Co-operative bank||£2000||£1400||None||Can be under 18|
|Halifax||£3000||£500||Personalised debit card||One year after graduation to pay it back|
|HSBC||£3000||£500||18 music albums||Can apply for a student credit card|
|Lloyds TSB||£1500||£500||NUS Extra card||They contact your current bank – switching is easy|
|Natwest||£1500||£500||Taste card membership||Branch on Warwick campus. Need to be a permanent UK resident|
|Royal Bank of Scotland||£1500||£500||Taste card membership||Need to be a permanent UK resident|
|Santander||£1500||£500||16-25 railcard||Branch on Warwick campus. Can convert into graduate account to help pay off overdraft after graduation|
Now, looking at these comparisons can make your head go a bit twisty, so here are some points to consider:
1. Get the biggest interest-free overdraft
Try and get the largest guaranteed overdraft that lasts for as long as possible. You may not get the maximum amount, so make sure you get a quote from each bank in order to compare.
2. Think about the freebies
If you really can’t decide, the freebies may swing it. However, think about the value of each one – for example, a free railcard will probably be better in the long-term rather than 18 music albums.
3. Don’t go over your overdraft limit
If your limit is £1500, do not spend any more than that. If you go over your overdraft, you will get massive charges which you may struggle to ever pay back – oh, and your parents will go mad.
4. Don’t just stick to the bank you’ve always been with
It’s easy to be lazy and simply convert your current account to a student account, but don’t! Look elsewhere first, otherwise you might miss out on the best offers.
5. Don’t just choose your closest branch or ATM
Having a Santander and Natwest on campus doesn’t mean they’re necessarily the best banks to choose. After all, most branches will be in nearby Coventry or Leamington, and I’m with Santander and I didn’t find it helped that much (I went in the branch twice over an entire year).
6. Check out graduate packages
You’ll want to make sure that you have plenty of time to get out of your overdraft after you graduate, so look at what your potential bank offers.
What you’ll need to open an account
- Proof that you are a student (confirmation letter from UCAS/your university)
- A copy of your student loan confirmation
- Photographic identification (driving licence, passport)
- Proof of home or term-time address (bill, bank statement)
As debit cards are linked to your bank account, you should automatically receive one from your bank. When you pay with a debit card online or in a shop, the bank account your card is linked to will automatically be charged that amount of money. You can also use your debit card at an ATM or branch so you can withdraw cash.
Remember a student account is essentially a current account with an overdraft, so you should treat your new account no differently to how you would treat a current account. Also consider which debit cards are most widely accepted – these usually include Visa or Maestro (Switch).
A credit card is optional and is by no means necessary for your time at university. Personally, I don’t have one and would not recommend having one, as you can run up a large bill and not realise until the end of the month. However, they can sometimes be useful in emergencies (for example, if you have reached your maximum overdraft just before the next part of your maintenance loan comes in and want to pay for something after your loan has come in).
Some banks offer student credit cards, or you can apply with a different provider. Make sure you compare APR rates – usually the lower the APR, the lower the amount you have to pay back in interest. You have a certain period of time to pay off your credit card bill interest-free (usually up to 56 days), however after this time period, you will be charged interest on the outstanding amount borrowed at a high interest rate. So be very careful with your spending!
Credit cards provide extra protection if you buy anything over £100. If something goes wrong with the purchase (e.g. the company goes bust and can’t provide a product) your bank can provide you with a full refund. You can also withdraw money at an ATM with a credit card, however this is not recommended as it can accumulate huge charges.
Follow these tips and you can’t go wrong with your cash. Have you got any more student banking tips? Tweet your suggestions to @BoarMoney.