Money Insider: Pick interest-free overdraft over freebies

 

With A-level results due to be unveiled this week, students will soon be busy sorting their university arrangements for the autumn, and that includes opening a bank account.

The banks are keen to attract the potential high flyers of tomorrow with one eye on signing them up for their profitable insurance, pension and mortgage products in later life.

The big high street providers have released details of their student account packages for this year, and as usual, are offering an array of incentives in an effort to win the custom of the new intake.

However, the most important element of a student bank account for most people will be the ability to borrow as much money as cheaply as possible. So even though free music downloads, gadgets or restaurant discount cards may sound tempting, the following numbers should convince you to give the gimmicks a wide berth.

If you can borrow an additional £1,000 interest free, you would save around £100 every year compared with a student bank account that was to charge you interest at a rate of 9.9 per cent, such as with Co-op Bank. The saving could be much more if you compare the charges from Barclays, where students will pay £1 per day for agreed borrowing over £2,000.

That adds up to considerable saving over the course of your time at college and far outweighs the value of any incentives on offer.

Halifax and HSBC offer the largest interest-free overdraft limits of up to £3,000, but both are subject to application and not granted automatically.

Additionally, be aware that some of the banks will limit how much you are able to borrow each term, particularly in the first year.

Whichever bank you choose, make sure you don't go over your interest-free limit as you could end up paying hefty charges which you can ill-afford on a student budget.

The only possible exception to the rule regarding incentives comes from Santander.

All new accounts are eligible for a free four-year 16-25 railcard, a benefit that could prove a big money saver if you plan to use the train frequently.

The railcard cuts student rail fares by a third, but bear in mind the maximum interest-free overdraft available from Santander is £2,000.

Money tips for students

Sign up for your student bank account before you get to college and avoid the queues, you can open the account at the branch where you live.

If there are a couple of accounts that meet your needs, check which one has a branch on campus – it's easier and cheaper to be able to pop in to talk to someone if you have a query.

Try to avoid the urge to sign up for a student credit card, but if you really must have one make sure it is only for emergencies.

As well as studying, university is also somewhere you will pick up some life skills, including managing your money and trying to live within a budget.

Budgeting may sound dull, but it has got to be better than running out of cash halfway through term and having to go cap-in-hand to your parents to bail you out.

If your money isn't going as far as you'd thought when you're at college and you're in danger of going over your limit, speak to your bank – if there is a branch on campus you'll usually be able to speak to a student specialist who can help you out.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

News
Nick Clegg on the campaign trail in Glasgow on Wednesday; he says education is his top priority
peopleNick Clegg remains optimistic despite dismal Lib Dem poll ratings
Arts and Entertainment
Déjà vu: David Tennant returns to familiar territory with Anna Gunn (‘Breaking Bad’)
tvReview: Something is missing in Gracepoint, and it's not just the familiar names
Arts and Entertainment
Buttoned up: Ryan Reynolds with Helen Mirren in ‘Woman in Gold’
filmFor every box-office smash in his Hollywood career, there's always been a misconceived let-down. Now he says it's time for a reboot
News
people
News
Actress Julianne Moore wins the Best Actress in a Leading Role Award for 'Still Alice' during the 87th Annual Academy Awards in Hollywood, California
people
Sport
Ross Barkley
footballPaul Scholes says it's time for the Everton playmaker to step up and seize the England No 10 shirt
News
'We will fix it': mice in the 1970s children’s programme Bagpuss
science
Life and Style
2 Karl Lagerfeld and Choupette
fashion
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Graduate Recruitment Resourcer

    £20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

    Recruitment Genius: Telesales Executive - OTE £32,000+

    £18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

    Ashdown Group: Marketing Manager - B2B, Corporate - City, London

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Neil Pavier: Commercial Analyst

    £50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

    Day In a Page

    War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

    War with Isis

    Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
    Scientists develop mechanical spring-loaded leg brace to improve walking

    A spring in your step?

    Scientists develop mechanical leg brace to help take a load off
    Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

    Peter Ackroyd on Alfred Hitchcock

    Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
    Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

    Ryan Reynolds branches out in Woman in Gold

    For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
    Why Robin Williams safeguarded himself against a morbid trend in advertising

    Stars safeguard against morbid advertising

    As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
    The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

    UK horticulture industry facing skills crisis

    Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
    Hack Circus aims to turn the rule-abiding approach of TED talks on its head

    Hack Circus: Technology, art and learning

    Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
    Sevenoaks is split over much-delayed decision on controversial grammar school annexe

    Sevenoaks split over grammar school annexe

    If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
    10 best compact cameras

    A look through the lens: 10 best compact cameras

    If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
    Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

    Paul Scholes column

    Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
    Why Michael Carrick is still proving an enigma for England

    Why Carrick is still proving an enigma for England

    Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
    Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

    Tracey Neville is just as busy as her brothers, Gary and Phil

    The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
    General Election 2015: The masterminds behind the scenes

    The masterminds behind the election

    How do you get your party leader to embrace a message and then stick to it? By employing these people
    Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

    Machine Gun America

    The amusement park where teenagers go to shoot a huge range of automatic weapons
    The ethics of pet food: Why are we are so selective in how we show animals our love?

    The ethics of pet food

    Why are we are so selective in how we show animals our love?