The dreaded student bank account hunt: Part 1.

1 Sep

It is that wonderful time of year again – September, University students across the country are stirring from their summer slumber and remembering where their text books are. Meanwhile, a whole bunch of fresh faced young new blood are buying saucepans and bed covers whilst Mum panics about whether they can feed themselves. Of course, whilst priorities differ between students and parents, one thing that is usually always high on both lists is a student bank account.

There are several options out there on the high street with each one having its own set of pros and cons.

We are going to introduce you to a few of them and hopefully help you work out which is the best account for you.

This is going to be a two-part blog entry so that we don’t baffle your brains too much. If you just want to know about the bank accounts then head to Part 2, where each of the 9 High Street banks that offer student accounts are profiled.

Back to Part 1…

Before we dive into naming banks and talking numbers, it’s worthwhile us outlining the different features of a student bank account and how they work.

Why do banks bother with students?

Banks know a few things about students and why they are beneficial to have on the books. Students are going to gain a degree, therefore generally are going to earn more than their peers who don’t have a degree. Most people don’t like faffing about with changing bank accounts as it takes a lot of organisation and hassle. Therefore, banks know if they can hook students in early, they will probably hold on to them when that student becomes a young professional. They also know that most students will end up having some sort of overdraft that as soon as they graduate, the bank can start charging interest on. Money in their pocket!

What do the banks offer?

The first thing that you usually see when you hit a bank’s website is the freebies they are offering…this year it ranges from railcards, mobile and laptop insurance to travel insurance and ‘exclusive’ discounts. Some of these are genuinely going to be useful but it is important to look beyond these and have a proper look at the account underneath. If you look at the freebies as a way to discern between two similar accounts, then you will probably get a better deal than just jumping at the first offer that seems attractive.

Probably the most important feature of a student bank account is the overdraft. Nine high street banks offer student accounts with an interest-free overdraft which has a variable limit (usually dependent on your year of study but may also depend on a credit check).

The amount of overdrafts offered vary from £500 in your first year through to £3000 in your final year. Check out part 2 to see what is offered bank to bank.

If you are the rare breed of student that is mostly or always going to be in the black, then it is worth looking at the interest offered on your positive balance. Again, varying from bank to bank and profiled in Part 2.

Of course, this isn’t just for new students, it can be beneficial for existing students to switch too. Talk to your bank, they are surprisingly helpful and many even offer free financial advice for students.

It needn’t be as scary as it seems!

Part 2 of this blog is coming up…exactly what do the banks offer?

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One Response to “The dreaded student bank account hunt: Part 1.”

Trackbacks/Pingbacks

  1. The dreaded student bank account hunt: Part 2. « Clever Student Money - September 1, 2010

    […] Part 1, we talked about what banks have to offer students and now it is time to get down to the nitty […]

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