A student bank account isn’t any different to any other kind of account, except for the fact that a host of student deals are likely to be attached to it. Extras potentially include a free rail card, free cash, store vouchers and an interest-free or reduced interest student overdraft.
The Best Student Bank Account – How to Open One
Those who are over the age of 18 and intend to go to university on a full-time basis will be entitled to open an account. Whilst banks often allow someone to sign up once they have a conditional offer, most students still wait until their course commences.
Free Cash Incentives and Store Vouchers
Banks offer cash incentives and vouchers because they know that student bank accounts rarely leave them. Free cash provides a cheap way for banks to buy a quality source of future business. Will £20 help a student to make it through university? Modest cash incentives should normally be avoided if a main feature of the account.
Student Bank Account – Free Student Rail Cards
One of the student deals worth considering is a free rail card. Natwest currently offers a five-year rail card worth £120 to student who sign up with them. Whether this is a worthwhile consideration will largely depend upon how much rail travel takes place.
The Student Overdraft – The Best Student Bank Account Incentive
A Halifax survey revealed that 73% of students will utilise their student overdraft facility. This research undoubtedly led them to offer an interest-free student overdraft of up to £3,000. ‘Your Money’ voted the Halifax as the best account for 3 consecutive years.
Some student overdraft limits are tiered. This means that they go up in increments following each year of academic study. An account is more favourable when this tiering isn’t there. Seek an account where the student overdraft is maintained from the outset and no interest is charged.
Unauthorised Student Overdrafts – Rarely a Student Deal
It is worth checking to see how much different banks charge their customers for exceeding the authorised overdraft limit. When money is tight and student debt is a problem, these penalty rates can create serious financial difficulties. Never view a student overdraft as a reason for obligatory spending.
Deficit Banking – The Hidden Student Bank Account Incentive
As most student overdraft facilities are interest-free, it is worth considering transferring the money to a variable rate cash ISA. The important thing about a cash ISA is that the money can be withdrawn at any time in the event of a financial emergency.
Whilst a cash gift is a welcome starter, it doesn’t last very long and probably should be avoided if a main account feature. The best student bank account is the one that has features that are most likely to be utilised by the student. A student rail card is a useful option, but not if a student never travels by train.