A few weeks later, a new academic year begins at British universities, and many freshmen will experience a life independent from their parents. Unfortunately, an independent life is not only about partying with friends until the morning, but also preparing food, washing dishes, washing clothes and, of course, taking responsibility for your finances.
Financial independence is impossible without their own bank account, and many students (and along with them – and their parents) in the coming days will think for the first time about how to choose the first bank.
Choosing the amount of debt
The main parameter for poor students, living from one student loan to another, is, of course, a generous interest-free overdraft that will help keep you afloat during the worst times. The size of the overdraft may depend not only on the chosen bank, but also on the year of study: some banks offer freshmen a small overdraft, gradually increasing it every year or semester. The amount of the overdraft will also depend on the personal circumstances of each student, so it is not always worth counting on the maximum amount.
The best banks in terms of interest-free overdraft are Nationwide, HSBC and Halifax. They offer students overdraft accounts of up to £ 3,000 (HSBC offers this amount of overspending in their freshman year). Halifax offers an overdraft facility of up to £ 3,000, so there is a good chance that freshmen who are not yet very good at controlling their finances will receive a more modest offer. Nationwide offers first-year students an interest-free overdraft of £ 1,000, but by the third year it rises to £ 3,000. A similar overdraft is offered by Barclays Bank: by the end of the second year, students can expect an overdraft of £ 3,000, but at the beginning of their studies it will be only £ 500.
Do not forget that all the money spent will have to be returned, and you should choose a bank account not only based on the size of the overdraft, but also based on your own capabilities.
Amazon Prime or travel discounts?
Banks are trying to attract students not only with large overdrafts, but also with additional useful offers. So, all students opening an account with HSBC will receive a £ 60 Amazon gift card, as well as a free annual subscription to Amazon Prime, apparently to help textbooks ordered from Amazon ship faster. Santander is offering its new customers a free Railroad card that will cut the cost of any travel on UK trains by a third. However, Santander’s overdraft is quite modest: only £ 1,500 in the first three years of study.
A discount card, but for intercity bus trips, is offered by Natwest in cooperation with Royal Bank of Scotland. The discount on bus travel will also be one third of the regular price. Overdraft from these banks in the first semester is limited to £ 500, but then rises to £ 2,000.
Nationwide is giving away five additional £ 15,000 prizes to its student clients who open an account before November 30, 2016. The prize draw will take place on January 10th. The money won should be shared by students with their parents and used to pay student housing rent and a real estate loan.
A tip for lean students from money.co.uk editor Hannah Maundrell
- Banks advise students to open only one account, but thrifty students can open two accounts in different banks, one of which will be used for daily spending and overdraft, and the second – to receive interest on savings.
- Student loans and phone and internet bills should be placed in a savings account. Thus, you will have a fairly large amount of money in this account, bringing a good interest. Never use this account for daily spending.
- After calculating how much money you spend on food and entertainment each week, set up an automatic transfer in your savings account that will transfer the specified amount to the second account.
- Some banks prescribe in the rules that every semester or year, their clients must receive a certain amount of money on their account (this can be a salary or a loan for living). But even this obstacle can be circumvented: it is enough to set up the transfer of the required amount from the savings account to the checking account and back.