We heart piggybanks - but they're just not that comfy in your back pocket. We take a look at cash, credit and all things student banking
While freebies like cash, gig tickets and car insurance are designed to be enticing, if you don’t manage a student bank account well you may end up paying more in penalty chargesthan they’re worth.
Student bank accounts are designed to help you throughyour studies: you’ll likely get adebit card (for access to yourown money) and an overdraftfacility (for access to thebank’s).
If you’re going to avoidstress, sleepless nights and sobbing in front of your bank manager, you’ll want to learn how to work both like a pro. Shop around to see how student accounts stack up between banks. Balance the cost of any freebies and reward points againstinterest rates and charges. Choosing a bank with a campus branch might be useful, but you can withdrawcash for free from most ATMs (avoid those corner-shop machines that charge you for the privilege) and most accounts can be managed online or by (smart)phone.
This is the deal-maker for student accounts, as you’ll likely have times when you need emergency cash (we’re talking an urgent trip home, say, not getting Dr Dre headphones). If your account comes with a £500 overdraft, you can spend your existing balance plus up to £500 of the bank’s money. Any money you pay into your account once you’ve dipped into your overdraft pays off your negative balance first. Shop around for a 0% interest overdraft without fees.
Overdrafts are borrowed money: you may need to pass a credit check to get one (see Credit Scoring) and, like any debt, if you don’t keep on top of things, it can get harder and harder to pay back.
Don’t spend more than your overdraft limit without talking to your bank as you’ll be whacked with extra interest, charges and fees (the same goes if you spend more than you’ve got without having agreed an overdraft at all).
Get into good banking and budgeting habits and talk to your bank if you think you’re going to max out your limits — they may be able to extend your buffer so you avoid charges.
You’ll make interest on any money you keep in the bank, such as in a savings account. With the economy in more trouble than Justin Bieber’s comedy material, interest rates are pants-poor — but if you think you can keep a positive balance, look for accounts that pay higher rates of interest.
Paying for it
Cheques: Useful for paying deposits or bills. You’ll need to keep enough money in your account until the payment clears (which could take a couple of days) or risk penalty charges for bounced (unpaid) cheques.
Rather than entering your pin, you hold your card in front of a card reader — usually limited to around £20 per spend.
Paym (“pay ‘em”) is a way of sending and receiving money using mobile phone numbers: handy for paying your share of the gas bill or getting an emergency tenner from your big sis. You’ll need your bank’s smartphone app to send money, but anyone with a mobile phone should be able to receive payments (the cash is paid into/out of your bank account). Check if your bank offers it and whether it caps payments to help combat fraud.
Never share your pin with anyone — even with the bank — and always shield the keypad when you use a card machine or ATM. If you pay online, check the site is secure (look for the padlock in the address bar) and consider using a service such as PayPal (paypal.co.uk), which uses a password rather than your card details to pay for stuff.
Check your statements carefully and tell your bank if anything seems unusual;definitely tell them asap if your cards are lost or stolen so they can put a block on them.
Don’t be completely seduced by the latest technology — while it makes life easier, it also makes spending easier, too. If you want to keep a closer eye on your finances, cash is king.
As the UK’s leading financial capability charity, every year we produce the essential guide to student finance and managing money at university, The Student Moneymanual. Completely revised and updated for 2014/15, this year’s guide aims to gives you the skills you need to stay on top of your finances throughout higher education and beyond. So don’t hesitate, order your free copies today!