Guide to student accounts
There will be many things on your mind if you are planning to go to a UK university or a Higher Education college, and finances will be one of them. Students are entitled to a student bank account, which usually offer a number of benefits over standard UK current accounts.
With so much competition between banks for student customers, there are plenty of attractive deals and a lot for potential account holders to consider, which could work to better their university life.
This guide will help you choose the right bank account, give tips on how to manage it throughout the university years, and what to do once you graduate and how your accounts can be effected.
What is a student account?
In a nutshell, a student account is essentially a current account designed specifically for students.
The main difference being the overdraft facility, which usually comes for free. Some banks will give as much as £3,000 interest free, making a student account an essential financial tool. An overdraft is not the only freebie that the banks and building societies will use to lure students in with; there will often be plenty of other offers, including a 16-25 years railcard or free insurance, as well as free vouchers.
Who can open a student account?
Any students and soon-to-be students studying at a University of Higher Education College can open a student account.
You are able to open the account as soon as you have an offer letter from UCAS, whether conditional or unconditional, so you don’t have to wait until the university term begins. To open the account you will need all the usual documents and ID, such as address history, birth certificate, passport, driving licence, payslip, and your UCAS offer letter.
Can I have two accounts?
A student can essentially only hold one student account at any given time, as most banks state that it must be the main account, so don’t expect to grab the freebies from every bank.
However, you are able to hold a second bank account, provided that the bank or building society doesn’t require you to pay in a minimum amount each month, this needs to be checked as some do and some do not.
Students that are house-sharing may find a joint account to be a useful financial tool, as it could be used to pay all the household essentials, such as rent, utility bills and so on.
Important features to look for in student accounts
When looking at student accounts, the most important feature to consider is the overdraft, as it’s likely what will keep your finances afloat once your loan has run out. Students can get up to £3,000 interest free, but remember that the money does have to be paid back, so don’t borrow more than what you can afford to repay. Also checking when you’re able to take out the full overdraft, as some banks only let you take this out in the final year.
With online banking, fewer people visit a branch regularly. However, sometimes you might need a meeting with the bank to discuss your options, or you might just prefer face-to-face banking. If so, make sure there is a branch on campus or nearby.
Online banking/Mobile Apps
As we’ve just mentioned, online banking is becoming one of the most common ways for students to manage their money. Before opening an account, check to see if this facility is available and whether there’s mobile banking too.
Your overdraft may be interest free, but there might still be fees or charges to pay, especially if you exceed your limit, or have direct debits and standing orders returned.
Managing your account
Your loan is unlikely to cover absolutely everything you’ll need to live at University, so unless you have part-time job to top up your income, don’t be surprised if you have to dip into your overdraft.
While there is nothing wrong with that, interest-free doesn’t mean free, so you’ll still have to repay the money you have borrowed at some point; usually when you finish your undergraduate course.
To help keep your money matters on track, it’s important that you budget effectively. Know how much you need for the essentials, and what you have to spend on leisure. You should also keep an eye on your bank balance to ensure you’re not overspending.
What happens when university ends?
When you graduate or finish University, by definition you’re no longer a student, meaning you can’t have a student account.
However, your bank may turn your account into a graduate account, giving you the opportunity to reduce your overdraft over time, rather than having to repay it in a lump sum.
Most graduate accounts still offer interest-free overdrafts, but they tend to decrease gradually, allowing you to re balance your books.