Results are in, now it's time to get finances in order

Don’t be swayed by other gimmicks, it's interest-free overdrafts and fee-free banking that should be the priority for all freshers.

The day all students have been dreading has finally arrived, with results in and many now preparing for higher education. For those off to university or college, getting your finances in order is crucial.

Students may have studied hard for their A-Levels or Highers, but before they pack their belongings and get used to beans on toast, they must first choose a bank account to see them through university. Banks are keen to secure the student pound, as the belief is students often stick with the same account throughout their working life. Therefore banks often offer tempting gizmos and gadgets to entice students.

Kevin Mountford, head of current accounts at price comparison website moneysupermarket.com, said: “It’s vital that students see past the opening offers and look at which account will best suit their financial needs. A few free cinema tickets might be nice to have but they won’t help buy books or see you through to the end of term when the student loan has run out. Many students depend on their overdraft, so it’s best to look for an account that will offer an interest-free overdraft or at least one with a competitive long term offer to try and avoid incurring costly unauthorised overdraft charges.

“The penalties for stepping over an agreed overdraft limit are steep, with banks such as RBS and Lloyds TSB charging a staggering 29.8 per cent EAR. Students must also remember that these overdrafts and loans are not free money, and will have to be paid back at some stage.

“HSBC and NatWest both offer a good all-rounder for students – an interest-free overdraft of up to £2,000 and two of the lowest EARs on the market for unauthorised overdrafts.”

The top questions a student should ask are:

How much interest-free overdraft is available?
What other charges could I be subjected to, such as unauthorised overdraft fees?
Is there easy access to cash and any other essential banking services in your area?
And finally … what’s the freebie!”