Six Top Tips for Getting the Most out of your Student Banking

05-Aug-2010

In a month's time a generation of new students will be beginning their university careers, many of whom will be negotiating the tricky world of personal debt for the first time.  As most students dip into their overdraft at one time or another, it's particularly important that you get the right student bank account to keep this debt within manageable levels.  This means looking beyond the laptops, railcards and other flashy freebies at the freshers' fair and asking the following questions.

1. Does your bank charge you for your student account each month?  If you are looking for the basic features of a student account; overdraft facilities (usually interest-free), direct debits and standing orders, and a debit card and chequebook, you should not be charged a monthly fee for using your account.  If there is a fee, speak to the bank and ask them what it is that you are being charged for.

2. This leads on to Question 2: Does your student account offer you additional features, such as mobile phone insurance or breakdown cover? If so, you may be charged an additional fee for these 'benefits', either through a monthly account fee or in higher overdraft interest rates.  Only keep these (and keep paying for them) if you are going to make use of them and they are genuinely saving you money.  If they are not, opt instead for a free account. Make sure you read the small print before signing up to an account to make sure that there are no hidden charges.

3. How much access do you have to help and support?  You should be able to speak to a representative of your bank 7 days a week.  If your account has online banking enabled, you should expect to have access to your account 24/7.  It is also a good idea to get to know the student banking specialist in your local branch - a friendly face makes asking for help much easier.  An extra tip is to use www.saynoto0870.com before calling your bank.  This website is a directory of all the local business numbers in the UK (e.g. 0207, rather than 0845), so when you're stuck on hold to your bank you can use your free minutes rather than paying the pricey premium rate fees.

4. Is there a 'buffer zone' on your overdraft limit, and if so how much will it cost you?  Student accounts will often have a buffer zone, so that if you go over your overdraft limit you will still be able to take money out.  On some accounts this is free but banks often charge you large daily fees for this service (considered as an 'unauthorised overdraft'). Best to keep a close eye on your balance, especially around the end of the month, and stay within your limit wherever possible.

5. What are the charges if you cannot make a cheque or direct debit payment? This leads on from the unauthorised overdraft question.  If you do not have sufficient funds in your account to pay a cheque that you have written to someone or meet a direct debit payment, you will be charged for this.  However some accounts charge you much more than others, and often the penalties far outweigh the actual administrative cost of dealing with your failed payment. Take the time to compare all the various fees and charges before deciding on a student account.

6.  What is the interest-free overdraft limit on your account?  Some banks will operate a tiered overdraft system, where they will only give you access to the highest borrowing limits in your final year.  Before opening an account, work out a budget for each year of your course that takes into consideration your accommodation and tuition costs, a basic living allowance (for food, travel and clothes) and your (approximate) income over this period.  This should help you to work out what overdraft you would need, although it's important to plan for paying your overdraft off before the interest-free period ends.  As a final consideration, look for a bank that gives you an interest-free period lasting several years after you graduate, so you have time to sort out a steady income.

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