Going to university is a big decision and will involve many other choices, often seemingly endless, such as what to study, where to study it, and whether to take out student loans, and so on. One other important decision is which student bank account to go for.
Why get a student account at all
Many students consider whether the hassle of getting a different student bank account at all, rather than staying with their usual current account, is worth the hassle. Having to change direct debits and any salary details is a bit of a nuisance, but there are many benefits to getting a student account, such as a guaranteed interest-free overdraft, discount cards and free gifts.
While it’s not a good idea to use an overdraft all the time, students do find that they rely on their overdrafts, to tide them over whilst they wait for their student loans. Student loans are paid in three instalments, which coincide with the beginning of each term of study, so ironically, payments are made after the Christmas holidays and the Easter holidays, when most people need money most of all.
Overdrafts range from a guaranteed £200 to up to £ 3,000 which is subject to status, but the majority of banks offer around £ 1,000 as standard. The Bank Of Scotland offers student customers an interest-free overdraft of £ 3,000 for the longest period of 5 years. The banks Lloyds TSB and Natwest offer £ 1,000 to first-year students, but this increases each year, all the while remaining interest-free. The Co-op Bank offers the highest initial guaranteed overdraft to first-year students, of £ 1,400.
Some banks offer their student users cash or gift incentives to take one of their accounts. Natwest, for example, gives its customers a free 5 year student railcard, which is worth £ 130, and the Royal Bank Of Scotland also offers a 3 year railcard. Halifax offers a 25% AA discount, and Lloyds TSB will give you a free speaker and some music downloads.
Other things to consider
Also consider whether the account offers ongoing graduate services, such as an interest-free or reduced interest overdraft. You might also want to make sure online and telephone banking are free, and that you get a Visa debit card. Some banks also are linked with credit cards so check these too if they are important to your needs.