The good news is you\u2019re in demand. If a bank can get you now, there\u2019s a good chance they\u2019ve got you for life. Or so they think. But how can you compare a free railcard with high interest rates or a generous final-year overdraft? We take a look at some of the best offers (at the time of writing) and provide a few invaluable pointers.<\/b><\/p>\n
Don\u2019t let free stuff cloud your judgement<\/strong> Understand your overdraft\u2026<\/strong> \u2026And how to pay it off<\/strong> Consider the whole range of benefits<\/strong> Remember you can always switch<\/strong>
\nWhen banks are waving free cash (\u00a3125 at First Direct) and \u00a360 Amazon vouchers (thank you, HSBC) under your nose, it\u2019s hard not to bite. But take a step back and think about what you really need longer term.
\n\u2022 If you expect cash to be tight, the most important feature is a large interest-free overdraft and low charges on an unarranged overdraft. But be careful of the small print here. Some accounts will lure you in with interest-free deals in the short term but have crazy high rates longer term or sizeable fines for missing repayments. Also check the bank doesn\u2019t require monthly payments to qualify for their perks and freebies (\u00a3500 per term at Santander).
\n\u2022 If you won\u2019t have time for trips into a branch, find out which banks have the best internet and app-based banking.
\n\u2022 For students with healthy balances, current accounts with high interest rates (try TSB and Nationwide) and rewards for paying in each month should be a priority.<\/p>\n
\nWahey! Free money! When you\u2019ve calmed down take a moment to look at these magical facilities a little closer.
\n\u2022 This year, banks are advertising interest-free overdrafts of up to \u00a33,000. But don\u2019t let headline offers mislead you. The maximum amount may only become available in or after your final year, and you\u2019ll need to qualify for it in any case. While HSBC offers first-years up to \u00a33,000, this could shrink to a mere \u00a3500 limit after the credit check.
\n\u2022 Make sure you understand how much it will cost if you exceed the arranged overdraft. Santander charges an eye-watering penalty fee of \u00a35 a day, which will clock up a mini mountain of debt in no time.
\n\u2022 A generous interest-free overdraft isn\u2019t just for those who expect to spend their student days in the red. If you\u2019re well organised and have impeccable money management skills you could take out an interest-free overdraft and use it to top up your savings. But again, remember that the interest-free ride won\u2019t last forever, so make sure you know when it ends.<\/p>\n
\nMost banks will automatically turn your student account into a graduate account when you leave uni and give you up to three years to repay your debt. We suggest you don\u2019t leave it to the last minute or you could find yourself asked to pay back a \u00a33,000 overdraft all in one go.
\nThis is also a good moment to point out overdrafts are not the same as a student loan. You\u2019ll find all major banks state overdrafts are repayable on demand in their terms and conditions. With a loan, paying back the debt gradually over the duration of your studies and beyond is all part of the agreement.<\/p>\n
\nIt\u2019s not all about freebies and overdrafts. Here are just a few other benefits banks are offering their customers right now.
\n\u2022 A credit card will improve your credit history if you use it wisely (or even not at all). Natwest and Royal Bank of Scotland student current account packages will give you this option.
\n\u2022 If you\u2019re concerned about banking ethics, you might want to consider the Co-op. They refuse to work with organisations with poor human rights or environmental practices.
\n\u2022 Nationwide doesn\u2019t offer student-specific banking but their FlexDirect account has one of the best interest rates around. You\u2019ll receive 5% on credit up to \u00a32,500 for the first year, as long as you pay in \u00a31,000 a month. They also boast award-winning online banking.
\n\u2022 The Barclays Student Addition account offers free text updates when your balance is getting low. So if you have trouble staying on top of your finances this could help you keep track.
\n\u2022 If you want a bank that will look after you, First Direct is streets ahead according to a survey by the Institute of Customer Service. Although it doesn\u2019t have high street branches or student-specific accounts.<\/p>\n
\nYou don\u2019t have to be loyal to the banks. Check out new student banking deals at the end of every year and switch if you find something better.<\/p>\n