Tip 2: Get the best bank account for you
Most of us have a bank account but it might not always be the best choice available. Now is the time to be proactive and choose a bank that is going to directly benefit you. There are lots of accounts specifically designed for students, with beneficial features created with you in mind.
An overdraft is when the bank allows you to spend more money than you have – so your balance can dip below zero. It is a form of borrowing. 49% of students use an overdraft, and although it’s always best not to borrow if you don’t need to – at some point in the three years or more at university, you may find you need to. See if an overdraft is a good idea for you.
Many student accounts offer 0% overdrafts – this means they do not charge you for going into an arranged overdraft . Anything you borrow, you simply pay back with no added interest . Student accounts can offer different amounts that you can borrow through an arranged overdraft. Think about what you may need to use. However, once you leave University – you will be charged interest.
Most banks will offer a Graduate Account. You don’t have to stay with the same bank, you can switch accounts again to make sure you get an account that suits you best, i.e. a graduate account with 0% interest again could end up saving you £100’s in fees and charges. Graduate accounts do slowly decrease your interest free overdraft amount. This means the larger your overdraft, the more interest you will be paying.
Some student accounts offer things like railcards, free subscriptions, or free cash for joining their bank! Have a look around and see what you could benefit from.
Most banks don’t allow you to open more than one student account (you also don’t want to have more debt than you can handle from overdrafts) – but there’s lots of current accounts out there that may be beneficial for you to use alongside your main one. Another account could help you separate your ‘needs’ (bills, food), with your ‘wants’ such as socialising and takeaways.
Have your loan go into one bank account. Work out how much your monthly bills will be and at the beginning of the month, transfer this amount into a second account. Set up a Standing Order on that account – so these bills are paid off regularly. You now have the money you can pay for food, travel and socialising in the original account.
Banking apps and app-based banks, such as Starling and Monzo, can help you to keep track of your money; train great spending habits and encourage saving with saving ‘pots’ and goals. If you’re studying abroad then some accounts allow you to use your card with no fee in certain countries.
