Top 3 tips for choosing a student account
Various studies have shown that people typically stay loyal to their bank for an average of 17 years. With the likelihood that you’ll be sticking around for a while, it’s no wonder that banks are so keen to provide so many perks and rewards to entice young people who are looking to set up their student current accounts before heading off to university.
However, it’s important to be smart when you’re choosing which student account to go for and look at the bigger picture when considering perks. As fantastic as a free railcard might seem on the surface, you can buy one of these yourself for just £30 per year, whereas choosing an account with a bigger interest-free overdraft limit could save you hundreds of pounds worth of fees in the long run. We’ve compiled our top three things to look out for when you set up your student account.
1. Overdraft limits
Interest-free overdrafts provide a little financial flexibility when you’re on a strict student budget and most banks offer at least one-year post-graduation to pay them off. Make sure you pay attention to the terminology used in advertisements for overdrafts limits. Is that £1,500 interest-free overdraft in your first year guaranteed (if accepted) or is £1,500 the upper limit? All account applications are subject to credit scorings and you usually won’t be told why you’ve been offered a lower amount so a guaranteed limit can be a sensible move to avoid any disappointment.
2. Student credit cards
Credit cards often get a bad reputation, but if you’re in control of your finances and pay the balance off each month, they can be a great way to shop with a little extra protection on purchases under Section 75 of the Consumer Credit Act. This means that if you have any issues with a purchase and the supplier won’t help, you can claim a refund from your card provider instead. Especially as a student, when you probably don’t have a huge amount of spare cash tucked away for a rainy day, a credit card can also be wise to have on you for real emergencies.
Sensible credit card use is great for building up a positive credit history, too, which will be really important when you come to apply for mortgages or bigger loans in the future. Natwest, Royal Bank of Scotland, Lloyds and Halifax banks all offer special student credit cards.
3. Sign up perks
Once you’ve narrowed down your choices based on the nitty gritty of credit cards and overdrafts, think carefully about which sign up perks are going to sway you. For instance, HSBC currently offers a £60 Amazon voucher incentive. This is great and will go a long way towards buying your textbooks. However, in comparison, Santander offers a four year rail card which saves you a third off all train fares. These savings are likely to add up to much more than £60 over the course of your degree.