A considered approach. It’s worth taking a little time for contemplation before opening your new student account.
The big banks and building societies will try to win you over with freebies, which may sound attractive in the immediate term – but remember that you’re likely to end up with your bank of choice for many years to come (perhaps, even, giving them lifelong loyalty). With that in mind, consider the long-term advantages of each. Bank managers know that, as a university student, you’re likely to go on to become a high-earning high-flyer. They need you every bit as much as you need them.
When to act
Although you shouldn’t feel rushed or pressured, you’re likely to be a much more attractive customer to the high-street banks and building societies at the start of your academic career than you will be in, say, six months, so start your research early. All you usually need to set up a student account is your UCAS offer letter (conditional or unconditional), so you can sort out your banking before term starts. That means peace of mind, but it also means an extra few months reaping the benefits of advantageous student deals, such as shopping and travel discounts and an interest-free overdraft.
If you’re slower off the mark, however, you can set up your account as a fresher. Don’t be too swayed by the people you meet at your university freshers’ fair, though – they’re likely to be the most influential local provider, and not necessarily the provider offering the best deal for you. Take some initiative and shop around.
What should impress you, then? Almost every student bank account offers online access and free cash machine withdrawals at all banks. That’s the minimum you should expect. Where they differ tends to be in the size of the interest-free overdraft. Here, your ears should prick up. Go for the biggest and longest. Hopefully you’ll never need it – but it’s important to have that cushion.
Most students leave uni with some level of debt (the average is around £20,000), so it’s worth considering now how to ease the burden later. Go for the longest free overdraft limit, and the lowest interest rate thereafter. Then all you need to do to make the most of your money is stay within your agreed overdraft limit.
A positive relationship
Once you’ve chosen your banking provider, consider them a friend. Talk to your bank manager and student finance adviser. Keep channels of communication open. If you can, meet staff personally. And if you ever need to extend your overdraft limit, or have any other banking needs, make an appointment to discuss it face to face. You should find they’re flexible and responsive to your needs, especially if you can show you only need their support for a fixed period of time (until you take a holiday job to get back in control of your finances). If you prove responsible, your bank is likely to support you in times of need. On the flip side, if you flaunt the rules – exceed your overdraft limit without permission, for example – you will pay dear.
About those freebies?
When all’s said and done, something for nothing shouldn’t be ignored. Except, when it comes to student banking, it’s something for something (a freebie for your custom). Consider the real value of what you’re being offered. Can a bank buy your loyalty for £50? A student railcard? Ten per cent off at Pizza Hut? If it’s an “extra” – ie, if you’ve already been won over by the terms and conditions of their student account – then, by all means, be swayed. But don’t sell yourself for a discount Margherita. It’s just not worth it.
Oh, and before you even think about it, it’s not OK to open a raft of student bank accounts to grab all the freebies on offer. The banks won’t allow it.