Student finance: find an account that works for you

Don’t be swayed by freebies, go for a bank that offers the best overdraft deal

Choosing the right bank account is an important if you want to make the most of your student loan. Unlike other current accounts, students are usually offered an interest-free overdraft, which can be invaluable as you start coping with the new and sometimes unexpected expenses that come with independent living.

Imagine this scenario: you are in your first term and your first essay deadline is approaching. Suddenly, your laptop stops working. You haven't budgeted for this, but your overdraft allows you buy a new laptop and meet your essay deadline – it gives you time to earn or budget your balance back into positive numbers.

Martin Lewis, who edits the website moneysavingexpert.com advises students to go for the bank that will give them the biggest and longest free overdraft facility. Pointing out that the average student is likely to graduate owing more than £20,000, he says it's vital to find the cheapest way to borrow.

Another thing to consider is the interest rate, which can earn you useful money. Some banks are still offering freebies to students, such as free cash and a YHA membership. A few years ago you could take advantage of these by opening several student accounts, but it has become more difficult since then with banks usually requiring your main income or student loan to be deposited with them.

There is now little financial advantage to having more than one account, but they can help control your spending. Christian Keating, a second year engineering student at the University of Edinburgh, keeps his spending under control by making use of three bank accounts. He has two current accounts with the Co-operative Bank, and a student account with RBS, which he opened when he was accepted by Edinburgh. "My student loan is paid into one of my Co-op accounts, which gives me a higher in-credit interest than any student account would," he says. "Then I transfer money every month into my RBS student account, which I use to pay my rent. I also give myself a monthly spending allowance which I put into my other Co-op account, which does not let me take out more money than I have in there. This helps me keep track of how much money I'm spending, and stops me overriding my budget."

It is vital to calculate your budget before going to university, because the lifestyle change is huge. Make a simple spreadsheet. On one side, establish your income, which includes your student loan and things such as earnings from part-time jobs or parental contributions. On the other side, list your outgoings, which include rent, food, mobile phone bills, laundry, toiletries, books, photocopying and social life costs. Divide your income into how much you can afford to spend on each of these each month and week. Even if you don't stick to the budget, it makes you realise when you are overspending and when you will need to compensate for it by splashing out less.



Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
Have you tried new the Independent Digital Edition apps?
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs Student

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

Guru Careers: Graduate Account Executive / Digital Account Executive

£20k + Benefits: Guru Careers: We are seeking a Graduate Digital Account Exec ...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

Independent Dating
and  

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

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before