Tuesday, 15 March 2016

How to pick a bank account for uni

Banks want you as a customer so will try to tempt you with gimmicks like gift certificates and freebies, but other features could save you money and help you stay on top of your finances.

Student accounts work like normal bank accounts but they come with extra features, and you can only open them if you are in higher education.

Here’s what to look for:

Look for the best overdraft

Overdrafts let you keep spending after the balance in your account hits zero. Your account will then show a negative balance, so if you withdrew £30 with just £5 left in your account, your new balance would be -£25.

Overdrafts usually charge interest on what you borrow. However, many student accounts offer interest free overdrafts of up to £3,000.

Some student overdrafts increase each year; for example, you could get £1,000 in your first year, £2,000 in your second year, and £3,000 in your third year.

You will have to repay the amount you borrow at some point, so check how long each interest free overdraft lasts. Some will be up to six years, which could give you time to graduate and get a full-time job before you need to pay it back.

Be careful not to spend beyond the overdraft limit because you will be charged fees and interest and could damage your credit record.

Watch out for fees

Bank accounts can come with other fees too like:

monthly or annual fees for holding the account
fees for failed standing orders or direct debits

Most accounts charge you for sending money to another country, withdrawing cash abroad or requesting copies of old statements. Choose an account with low fees for these services if you will use them.

Who can get a student account?

Most student accounts will only accept you if you will be in full-time education, are older than their minimum age and a UK resident.

Some accounts also require you to pay at least two bills from your account every month (by direct debit), and some need you to pay in a minimum amount each month or term (whether that comes from your student loan or a job).

Find out how you can use the account

Most current accounts should offer:

A debit card
Online banking
ATM withdrawals
Telephone banking
Contactless payments or a service like Apple Pay
A mobile phone app

Decide which of these features you need and make sure the account you choose offers them.

Check for nearby branches

Having a branch close by could be useful if you need to:

pay in cash
pay in a cheque
take out cash if you lose your card

Check the interest rate
Some current accounts pay better interest rates than most savings accounts. You only earn interest when you are in the black, so only look for a high interest rate if you are sure you will always have money in your account.

If not, choose an account with a cheap overdraft because this will save you more money.

Free stuff

The freebies offered with student bank accounts can include:

free software like Microsoft Office
free student railcards
gift vouchers
cards that offer discounts in shops and restaurants like the tastecard or an NUS extra card

These freebies can be useful, but finding an account that offers what you need is more important, so don’t pick an account for its perks unless they will save you a lot of money (like a railcard if you frequently travel by train).

You can use our comparison of every student current account to find one that suits your needs. If you find two or more accounts that offer everything you want, then pick the one with the best freebies.

Source = money.co.uk

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