Student accounts are bank accounts designed specifically for those in higher education. These accounts allow you to make transactions in and out of the account and often have other benefits, such as interest-free overdrafts and free railcards.
Here are a few things you need to consider...
- 0% Overdrafts
An overdraft is where the bank allows you to borrow money and spend more than what is in your current account up to a set amount. Most students will make use of an overdraft during their studies and a key benefit of student accounts is a 0% interest overdraft. That’s why it’s important to make sure you are opening an account that works for you and any overdraft you agree is 0% for the longest period available.
Overdrafts can be a useful tool in managing your finances, however, it’s also important to be wary of applying for the maximum overdraft possible just because you can. If you budget well, you may be able to keep your overdraft as a buffer only, and the smaller your overdraft, the less tempted you may be to make use of it on non-essential items, resulting potentially in financial difficulty.
If you do have access to an overdraft, remember it is borrowed money and will need to be paid back. Make sure to track your spending and keep and budget. You can do this for free using the Money Helper website https://www.moneyhelper.org.uk/en/everyday-money/budgeting/budget-planner
- Check Your Credit Score
When applying for any consumer financial products, including an overdraft, the bank will check your credit file to assess whether to lend to you and often how much to lend. To find out more about what is involved in a credit check or to check your credit profile for free, check out https://www.experian.co.uk/consumer/experian-credit-score.html. It is advisable to check your own credit score before applying for any financial product, so you know whether you will be accepted and avoid the impact of an unsuccessful hard credit check on your credit file.
- The Switch to Graduate Account
When using a 0% overdraft it’s important to remember you will need to pay this off as soon as possible after graduating, if not before. This is because once your account switches to a graduate account any money borrowed through use of an overdraft may have interest applied to it. Some banking providers may still offer some benefits for a period after finishing your course, such as 0% interest or a preferential rate, but you should check this with your provider when opening an account.
Once you graduate, this can be a good time to reassess what has been working for you about your account and look into whether switching to a different provider’s graduate account would be more beneficial. This can help you to make the most of your money and gain benefits such as an extended interest free period.
When opening a student account remember:
- You will need proof of address and identity. This can include your passport, birth certificate or current UK driving licence. You will also need some student identification, such as a letter of student status. This can be accessed and downloaded directly from your Portico.
For free and confidential money advice or the chance to speak to someone about improving your financial situation, contact the advice service for an appointment at [email protected]
For more information on the types of student accounts and which may be the best for you, visit https://www.moneysavingexpert.com/students/student-bank-account/
The above information is for general information purposes and does not constitute financial advice. For tailored financial advice, students are advised to do their own research, seek independent regulated financial advice and speak to their chosen banking provider before accessing any financial products.