Get YOUUUUUR student accounts here! We review the latest accounts for students, and give some paternal advice.
Banks don't make it easy to find and compare student accounts, so, to help you out, I had a look around. Here are the top five I could find:
Top five student accounts
Bank | Interest-free | Fee for |
|---|---|---|
Bank of Scotland | 1-5: £2,750 | £28pm |
Halifax | 1-5: £2,750 | £28pm |
Co-operative Bank | 1: £1,400 | £35 |
Smile | 1: £1,000 | £5pm |
Royal Bank of Scotland | 1: £1,250 | £30 per item |
Data from Moneyfacts, and from my general meanderings around the Web
I chose to order this table based on the size of the interest-free overdraft in your third year of university, because the majority of students will be at uni for three years (I think).
Now, and for your education!
These interest-free overdrafts are not guaranteed and they are subject to status. In fact, lots of banks try it on: they entice you in with a good rate like those above and then write a letter saying 'Congratulations, you have a 0% overdraft!...But we're just giving you a £500 limit.'
If they tell you your limit is lower than those shown above, you should push hard for the full limit -- try not to be fobbed off! Threaten (politely!) that you'll close the account and go with some other bank, if necessary. That threat might just do the trick, so it's worth a go.
Also, you might be offered an additional overdraft that charges interest. So, if they give you a limit of £2,000 and they've agreed that the first £1,000 is interest free, then the last £1,000 will cost you in interest if you use it. The interest they will charge here is called the authorised interest rate.
If you exceed your overdraft limit, you will be charged at an extremely high rate of interest, the unauthorised interest rate, which is usually around three times higher than the authorised rate. I assure you, this adds up!
Also, you'll be hit by those big charges you see in the third column. Do not underestimate those charges. Many students rack up hundreds of them without realising it, by managing their finances badly. These charges build up into debts of thousands of pounds. It is a big cause of debt and angst for many graduates.
If you ever need to go beyond the overdraft limit, don't bury your head. Talk to your bank. Ask them to increase the limit. It's much better than being charged fees and paying the extremely high unauthorised interest rates.
Here's some paternal advice. (OK, I'm only 27, so it's really meddling elder-brother advice.) Remember, life doesn't end at 21. You'll still want to have just as much fun after university, and you'll also eventually need to think about putting a deposit down on a house, and the cost of children. So do everything you can to keep your debts down. Otherwise, those debts might catch up with you and you'll have to make big sacrifices later on.
We'll be writing some more practical tips for students this summer about credit cards, budgeting, working and more. So watch this space!
Parents, uncles, aunts and grandparents!
Remember how bad with money you were when you were younger? Wish you had read some great advice from a cool website like The Motley Fool? If so, tell your budding-student relatives about this site by forwarding this article! (There's a button to do this at the top.) Get them on the path to Financial Foolishness ay es ay pee.
*Royal bank of Scotland say that £2,500 is available by negotiation, and subject to status. If you're a cocky young negotiator, you might try asking for that!