Student banking top tips
Andrew Hagger of Moneynet.co.uk looks at the student banking offers for 2010/11. The banks may have been through a tough couple of years but they'll still be eager to grab a decent slice of the student banking market this year.
As usual the there is a veritable feast of incentives and freebies on offer in an effort to win over the new intake 2010.
Moneynet.co.uk top tips for students
Checkout the Student Finance Section on direct.gov.uk where you can find all the details regarding student loan eligibility and apply online for your Tuition Fee Loan and Maintenance Loan - applications are already open for the 2010/11 academic year -plus if you get in early you're more likely to have your finance in place for the beginning of term.
Interest free borrowing is the No1 priority - The crucial element of a student bank account for the majority will be the ability to borrow funds as cheaply as possible. So whilst a few cinema tickets or a shiny new gadget may catch your eye, perhaps the following stats may help you make your decision.
If you could borrow an additional £1,000 interest free, this would save you £99 per year compared to a student bank account that was to charge you interest at a rate of 9.9% for authorised borrowing. Over the course of your life at college that could save you almost £500.
So if you've done your sums and you're likely to need to borrow £1,500 plus from year one, then Halifax and Barclays should be your first port of call.
Don't get stung by unauthorised overdraft costs - if you don't keep tabs on your balance and drift into unauthorised overdraft , in some cases you could see yourself being hit with interest rates nearing 30% EAR. Check your account regularly via online banking so you know where you stand as the last thing you want is interest charges taking a bite out of what will already be a pretty tight budget.
Most of the incentives are a waste of time - the exception to this is probably the offer from NatWest. If you're not reliant on a huge interest free overdraft to help get you through university and will be using the train to get to and from college, take a look at the student account from NatWest which comes with a 5 year young person's railcard worth £130.
If you're lucky enough to have a decent credit balance, don't leave it in your current account - most student accounts are paying next to nothing on credit balances. Santander and HSBC are offering 2% but only on the first £500 and £1000 respectively, whereas you can get 2.80% with the AA internet extra. Also if you keep your spare cash somewhere other than your current account, you'll be less tempted to dip into it!
Budgeting is vital, work out roughly what you're going to spend each month and try to stick to it. Don't get carried away and blow all your money in fresher's week. Student life is meant to be enjoyable, but make sure your sensible hat isn't far from your side, just because some students are splashing their cash on nights out at the student bar, don't be tempted by peer pressure - learn to say no sometimes and try to live within your means.
Set yourself a weekly allowance for food shopping and cash for going out and make an effort to keep within it. Just draw out your allowance in cash each week and get into the mindset that once it's gone that's it until next week - it may seem hard at first but at least this way you won't spend what you don't have.
Avoid a student credit card - If you really must have a credit card in your purse/wallet make sure it's only used for emergencies. Don't be tempted to use it as an extension to your budget and/or overdraft because unless you've got the cash to clear the account in full, your measly budget will be squeezed further with interest charges at almost 20% APR! The banks will make it easy for you to apply for a card when you open your bank account, but they are really best avoided until you have a regular salary.
Don't be scared to ask for help with your finances - if your money isn't going as far as you'd thought and you're in danger of going over your limit, speak to your bank - if there's a branch on campus you'll usually be able to speak to a student specialist who can help you out. Don't ignore the problems, they won't go away and could end up distracting you from your studies.
Don't forget to take out insurance. Today's student will be armed with a host of electrical goodies such as IPods, laptops and digital cameras - make sure you sign up for specialist student cover before you head off for uni.
Get a TV licence or get a fine - watching TV in the halls of residence is ok, but if you have a TV in your own room, don't forget to get a licence or you could be hit with a fine of up to £1,000. You don't have to pay it all in one go, check out tvlicensing.co.uk/waystopay/index.jsp
Take care when sharing a house - if your name is listed as the person paying the bill, it will be your responsibility to pay, even if you are let down by one of your housemates. This could have a serious impact on your credit rating, so make sure you can trust your friends to pay their way.