Student Bank Accounts Analysis and Comparison

By: MoneyFacts

In a few month’s time, many students will be preparing to leave home and head off to university. For many it will be the first time they are fully in charge of their finances, with budgeting and bill paying becoming a necessary evil.

Many students leave university with five figure debts, so, it’s worth them putting in some time and effort to finding the most suitable student account for their needs.

Michelle Slade, spokesperson for Moneyfacts.co.uk, commented:

“As most students spend their university life living in their overdraft, it is worth finding an account that offers a good level interest free.

“Inevitably, many will require more than this limit, so it is also important to check the authorised overdraft that will be payable on any additional borrowing.

“Halifax continues to offer the highest level of interest free overdraft of up to £3,000 from year one.

“Many other accounts offer a tiered system, with the level of interest free borrowing increasing each year and the high level only available in years four or five.

“It is also worth bearing in mind that some of the higher overdraft limits are quoted as ‘up to’. The level of overdraft offered will be credit scored and if you don’t fully match up to their criteria, you may be offered a lower limit.

“Many banks offer incentives to students to try and tempt them into taking their account, but these should be a perk and not the reason for selecting the account. While discounts offers and cinema tickets may seem tempting, you may end up paying for them twice over with a higher overdraft rate.

“While borrowing on a credit card may seem tempting, students should treat this with caution. Although limits offered to students are small, if you have no regular income to repay the debt then even a few hundred pounds can soon escalate as interest charges mount up.

“Many students will receive their grants as a lump sum at the start of each semester. It is worth setting yourself a weekly budget to ensure that you continue to have money to live on throughout the term.

“If you do get into trouble with your finances, don’t bury your head in the sand. Unauthorised borrowing can be very expensive and soon mount up. If you tackle any issue head on, the bank will be more lenient and willing to help.

“Many branches at or near universities also offer a specialist advice service, which can be invaluable in helping you manage your money.

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