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Six student banking tips

You've probably already got a bank account, but becoming a student opens up more flexible financial options. Here's how to manage your money effectively.

Contents:

Choosing a student account

Spend some time researching all the student bank accounts available well before you leave for university you can compare the latest student bank account offers over on the main Which? website.

Don't just choose a bank because they happen to have a branch on your campus – while it would be useful, most banks will have branches in your local town centre and online banking as standard. 

Tip: when you go to open your account, you'll need to take the following documents: photographic identification (e.g. passport or a driving licence); student loan financial assessment form; confirmation that you've been accepted by your university (e.g. AS12 letter); and something which confirms your term-time or home address (e.g. an old bill, confirmation of your place in your student housing).

Overdrafts

An overdraft allows you to withdraw a certain amount of additional money and most student accounts come with an interest-free overdraft facility, meaning you don't pay any interest on what you borrow. 

There can be large variations in the amount banks offer, so if it's likely that your outgoings will exceed your income at some point during your studies, it's worth looking for the one with the highest one available. Most offer interest-free overdrafts of £1,500 to first-year students, increasing to as much as £3,000 during your later years of study.

Don't class your overdraft as 'free money'; see it as an extension until you have more money coming into your account, i.e. your next student loan or pay day. Once you graduate, your limit will gradually be reduced so you'll need to pay your overdraft off within your interest-free allowance to avoid additional borrowing charges.

Tip: when a bank says they offer an overdraft 'up to' an amount, check what this means for you individually, as you might not be automatically entitled to the highest amount. Overdraft charges occur when you go into your overdraft without arranging this beforehand.

Credit cards

Credit cards allow you to pay for items on borrowed credit which you must pay back over a period of time, plus interest. The amount of interest you pay back depends on the Annual Percentage Rate (APR) for that card and how long you spread your repayments over. 

Always look for credit cards with the lowest APR, take advantage of 0% introductory offers and at the very least ensure you're making the minimum repayment each month so you don't incur further charges.

You'll probably be inundated with letters from credit card companies telling you that you're eligible for their credit card, but don't feel inclined to sign for a credit card just because it's being offered to you. 

Like overdrafts, credit cards can be very useful when used properly, but deadly if mistreated. If you need to make a large, one-off essential purchase, a credit card can be a life-saver as well as providing additional consumer protection. Just make sure you don't treat it as a daily financial source, nor as a method to get out of other debt. 

Tip: if you can demonstrate that you can handle a credit card properly, this can be a useful way to boost your credit score for the future.

'Extras'

Banks are trying to sign you up now as a student so they have you for life (read about graduate accounts here). That's why attractive incentives and extras are often on offer with student accounts, including cinema tickets, railcards or Amazon vouchers.

These should be seen as perks, rather than the main reason you choose a particular account. 

Tip: once you've chosen a student account, make sure you are well aware of any freebies! You might be entitled to something and not even know it.


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    Tracking your spending

    Keep tabs on your bank balance and what you're spending; this will prevent any nasty shocks like finding your balance is zero when you're at the supermarket till. 

    Amongst the hubbub of university life, it can be easy to lose track of how much you've spent in a week or month (especially when paying by contactless - take out physical cash so you can literally see what you have left). Burying your head in the sand isn't the solution.

    Set up text alerts, use online banking and mobile apps to keep track of your spending instantly, on-the-go. With these, you can check your balance in a few seconds wherever you are and you'll be less tempted to splash out on something you shouldn't when you see just how much you have. You can set these up to notify you when your balance reaches a certain balance, so you know when to curb your spending. 

    They're also handy for quickly transferring money to friends and housemates e.g. paying your portion of a utility bill

    Tip: it can be tough to make your funds last until the end of term, so get prepared early with our top 10 of things to remember to budget for.

    Further tips

    Here are some final tips when it comes to banking as a student:

    Getting notifications and messages: make sure any communications from your bank are reaching you; otherwise you might miss out on an important change to your account or a fantastic new perk.

    You can change how your bank gets in touch to suit you. If you opt in to receive emails from your bank, mark them as important so they don't go to your spam folder.

    Stay safe and organised: keep any sensitive information safe and secure, such as account numbers, passwords and security details. Memorise and throw out anything that says on it to do so (e.g. pin numbers). Don't leave these lying around.

    Also, it might be worth keeping a credit card separate from your wallet if you do lose this  that way you're not stuck without access to money. If you do lose your debit or credit card, you should still be able to withdraw money in-branch (although you'll need to take some I.D. with you).

    You can learn more about what to do if you've fallen victim to a scam via Which? Consumer Rights' guide.

    Switch if it's better for you: at the end of each year, evaluate whether you're getting the most from your current bank. Once you're at uni and have a better sense of your banking needs, your priorities might have changed when it comes to your bank. See whether other banks have changed their offering to students since you last looked and if this is better than what you're getting.

    Finally, don't be put off switching banks because you think it's complicated; apart from making an appointment at a branch to set up an account, your new bank should be able to take care of everything for you (including closing your current account, if you wish)
     

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