Whether you are coming to university straight out of school, or you are a mature student, the world of student banking may be a bit different to what you have been used to in the past. We've put together some information to help you get to grips with banking as a student and find the best deals going.
Student bank accounts are designed to suit the needs of those in higher education and are offered by most high street banks.
Like normal bank accounts, you can pay money in and take it out, but there are usually additional benefits such as interest-free overdrafts. You’ll get a debit card, which allows you to pay for things in shops and online without the need to withdraw cash.
Money Saving Expert has information on student bank accounts and the different perks on offer.
Banks offer any number of freebies and perks to get you to open your account with them. These range from free railcards to gig tickets. Try not to be enticed unless the offer is something that will genuinely save you money.
USwitch can help you assess your options and choose the best student bank account for you.
Many student accounts provide a set level of overdraft on an interest-free basis for the duration of your course. This is the main perk of getting a student account in the first place.
Most students need an overdraft and it’s usually the cheapest way to get money after your student funding. Having an overdraft doesn’t mean you have to use it, but it does offer a little help if you are struggling.
It is important to remember that this is not free money, the bank is just lending it to you and you will need to pay it back at some point.
Make sure you know how long your bank will allow you to keep your interest-free overdraft. This will help you plan for paying it back before they start charging interest, which can be as much as £1 per day.
Never go over your overdraft
This rule applies to everybody, not just students. If you go beyond your overdraft limit you will get charged. Check your balance regularly to avoid accidentally going over the limit, and always ask for help should you anticipate a problem.
Prepare to be credit checked
Whether it’s an overdraft, credit or store card, the bank will run a credit check to see if you meet their criteria. A credit check looks at your past financial habits. If you don’t meet their criteria, you may be turned down.
Don't pick a bank just because it's close
You can withdraw cash free of charge from any banks ATM and almost any bank gives online access so it doesn’t matter which bank has the closest branch. It's more important that you choose a bank that offers the best services for your situation.
When you graduate, switch to a new account
Most accounts allow you to access interest free overdrafts for a year after graduating. You can then pay this off gradually. Just remember not to build your overdraft to a level that you will struggle to repay.
This is the handy bit of plastic that you use instead of cash. The money comes straight out of your bank account.
This is a very different bit of plastic that uses money that you have borrowed to pay for items. You get charged interest each month and will need to remember to pay the bill.
This is a way to pay for a regular bill without having to think about it. Companies take the money you owe them on an agreed date. The amount can vary though, so you will still need to keep track of your account balance to ensure you have enough available to pay the bill.
This is similar to a direct debit but the amount does not vary.
It is important that you always keep a close eye on your bank balance to avoid accidental overspends and foresee any potential financial problems. Technology is making this easier to do this as banks develop online banking and apps for your mobile device.
Many banks now offer a range of accounts with various benefits. While these are a great way to get good deals on mobile phone, travel, breakdown and other insurance, they can be a waste of money if you don’t need or use these benefits.
Most of these types of account come at a cost, in the form of a monthly fee. The best way to determine whether the account is going to save you money, is to work out the annual cost and determine if you can get the freebies cheaper.
For example, if your account costs £10 per month, that is £120 per year. If the only benefit you would use is mobile phone insurance, can you get your phone insured for less than £120 a year?
Money Saving Expert has lots of advice to help you work out whether an account like this is worth it for you.
If you have lots of activity on your bank account, from direct debits to debit card payments, it’s easy to lose track of things. No matter your budget, regularly checking your account and cancelling unnecessary payments can save you a small fortune.
You’d be surprised how many people are pay for things they no longer use or need. Most commonly gym memberships, magazine/TV subscriptions and insurance for old items that are no longer used.
When auditing your bank account, ask yourself:
Do I use it?
Is it worth it?
Can I get it cheaper elsewhere?
If you are looking for a bank account, you don’t have to limit yourself to the well-known high street banks. Do your research to find a solution that best suits you and your circumstances.
Some Credit Unions offer current accounts as well as saving and lending facilities. You can read more about Credit Unions on our saving money page.
While it used to be a tedious process to move your bank account, fraught with the danger of forgetting to change the details on one of your monthly payments, it’s now much easier.
Don’t be afraid to shop around and change accounts, especially if the service you get is not up to scratch or you would be better off with a different account from a different bank.
The Money Advice Service has some helpful advice on how you can switch accounts.