Choosing the right student account to suit your needs is imperative if you want to avoid graduating with a degree of debt - and it isn't just about who offers the best freebies. Discounts on laptops, free railcards and money-off vouchers might be tempting, but you need to look at the whole package to see if an account is right for you.
Here, we explain what you need to know when choosing a student bank account...
Overdraft
There are many ways that a student will fund their university days - student loans, a part-time job or even the 'bank of Mum and Dad' are options. But most students will also rely on an overdraft to see them through and if you know that you will need this facility as part of your account then you'll need to look carefully at the interest-free limits that apply.
Most student accounts offer interest-free overdrafts on a tiered basis. For example, your interest-free overdraft limit in year one may be £500, but by your final year this could increase up to £2,000, depending on your circumstances.
When you do go overdrawn, make sure that you do this within your agreed interest-free limit - otherwise you risk being charged up to 28.70% in interest for exceeding this limit.
One of the best student overdraft accounts is the Lloyds TSB Student Account. This will offer you an interest free overdraft of £500 for the first six months, after which you can apply for this to be increased up to £1,000. After nine months you can apply for another increase up to £1,500 and, if you plan to stay at university for longer than four years, you can apply for another increase up to £2,000. This account charges one of the lowest rates if you do slip over your agreed interest-free limit, at 8.20%.
Benefits
Banks load their student accounts with freebies and offers to make it hard for you to say no. Even though you shouldn't choose your account based on benefits alone, there are some good deals out there - it's just a matter of choosing one that you will get the best use out of.
For example, one of the most attractive accounts for benefits is the NatWest Student Account. This offers students a free five-year 16-25 Railcard, saving you up to £130 for the cost of the card and up to 1/3 off rail fares. This is renewed every year automatically as long as you keep on using your account, great for those who don't drive and will need to travel to university. On top of this you will receive £100 off Asus laptops and a discount card offering up to 20% off at selected retailers.
Another option could be the Halifax Student Current Account that offers account holders 25% off AA membership, a 20% discount on Card Care insurance and commission-free travel money. These benefits are also available for 12 months after you have graduated.
Interest
For you savvy students who have no intention of graduating with debts, then an account that offers a good rate of in-credit interest will be your best bet. You may want to consider a standard current account as they tend to offer the better interest rates. Remember that you will need to be working while you are studying to consider this option, as many of the standard accounts require monthly funding of anything between £500 and £1,000.
The market-leading current account at present is the Santander Current Account, offers 5% interest on balances up to £2,500 as long as you can credit the account with £1,000 per month. If you have direct debits to transfer over then you will also benefit from £100 cashback if you use the account switching service.
Anything else?
Nearly all accounts now offer tools such as online banking, and NatWest has taken this a step further with its iPhone app, which is available to student account holders.
With this you can check your balance, set up balance updates to be sent to your iPhone on a day and time that you specify, and you can receive alerts when you are edging to your limit so you don't go over. If you are a pay-as-you-go user you can even top up your phone by using this app.
Lloyds TSB and Barclays also offer mobile services, enabling you to check your balance and also receive alerts when you are about to reach your account limit.
Below is a list of the main banks and their student offerings, and how they stack up:
|
Provider |
Account |
Credit interest rate (AER) |
Maximum interest-free overdraft limit |
Unauthorised EAR |
Benefits |
|
HSBC |
Student Bank Account |
2.00%
(up to £1,000 in first year of uni)
0% thereafter |
£2,000 |
19.90% |
Two years free worldwide travel insurance including winter sports;
Up to £2,000 interest-free overdraft entitlement;
Free TalkMobile SIM card with £5 preloaded credit |
|
Halifax |
Student Current Account |
0.10% |
£3,000 |
24.20% |
25% off AA membership;
20% discount on Card Care insurance;
commission-free foreign currency and travellers cheques.
All Student benefits are available for 12 months after course ends |
|
Lloyds TSB |
Student Account |
0.10% |
£2,000 |
8.20% |
Free NUS Extra Card;
commission-free travel money and non-sterling American Express Travellers Cheques;
Free YHA membership for a year;
40 free music downloads from eMusic;
Free text alerts, internet and telephone banking |
|
Barclays |
Student Additions |
0.10% |
£2,000 |
Personal reserve £22 |
Exclusive access to deals with Phones 4u;
Free texts alerts about your account to your mobile;
mobile banking |
|
NatWest |
Student Account |
0.10% |
£2,000 |
17.79% |
Free five-year 16-25 Railcard;
discount card offering up to 20% off at selected retailers;
£100 off Asus Laptops |
|
RBS |
Student Bank Account
(and in Scotland) |
1.02% |
£2,000 |
17.81% |
Discount card offering discounts at retailers such as Game.co.uk, STA Travel, 3 Mobile and New Look;
£100 saving on Asus Laptops
|
Sourced by www.moneysupermarket.com 29.07.2010
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
Rate This Article
Click on a star to rate this article.
