See beyond the freebies to get the top deal
1. A free overdraft is the most important thing. Even if your child promises to be prudent, they are going to go into the red at some point. So make sure they don’t get penalised. Typically, you should get a £1,000 to £1,500 free overdraft in the first year of study.
2. Just because a student has an interest-free overdraft, it doesn’t mean they should max it out. And remember that the free overdraft limit will be adjusted each year. That's a limit, not a challenge: it will eventually have to be repaid.
3. If you or your child looks like breaching their free overdraft limit, make sure they DON’T ignore the problem. Go to see the bank. They’ve dealt with students in this situation before. It is better to have an agreed overdraft even if you have to pay interest and fees than go into unauthorised overdraft where the charges and fees are punitive: interest of more than 20% is possible.
4. You can switch bank accounts when you’re a student. Make sure your new bank offers at least the same level of free overdraft, though.
5. Just because you, the parent, are happy with your bank doesn’t mean your child should open an account with it. There is no reward for family loyalty when it comes to banks, sadly.
6. Do make sure you and your child weigh up the value of freebies. Railcards are useful, but shopping vouchers possibly less so. Always focus on the overdraft rate and level first.
7. Students are internet-savvy enough to bank online. But don’t underestimate the value of a local branch, particularly when you are short of cash and need the understanding ear of a real person used to dealing with student money.
8. You can usually open a student bank account once you’ve got your offer letter after A-level results. By this time, the banks should have announced the details of their student offerings for this year. Then you can compare and contrast deals.
9. All the major banks offer student accounts. Look beyond the ‘big four’ – TSB and Santander student accounts are well-regarded too.
10. When you graduate, you need to move from a student to a graduate account. Again, you don’t have to stay with the same bank and can switch if you want to (but again, mind the overdraft).
- Compare the size of interest-free overdrafts offered on student bank accounts at www.studentmoneysaver.co.uk or www.moneysavingexpert.co.uk.
- You'll get most of your money from a student loan so check out www.slc.co.uk for more information.
- Check out information on grants and awards at www.gov.uk/education/student-grants-bursaries-scholarships.
Last updated 22 August 2017.