Comparing student bank accounts isn’t that easy – but take a look at the MoneyFacts best buy table, and you’ll see that the top two accounts offered on their are the Royal Bank of Scotland and Halifax student accounts.
Both of these accounts offer 2% interest if you are in credit, but possibly more importantly, as you’ll probably be in the red more often than not, they offer a high amount of interest-free overdraft from year 1 (many accounts gradually increase the amount of overdraft each year you’re at uni). Both accounts give £2,500 interest-free overdrafts.
Some banks may try to get you to take out an account with an attractive overdraft amount, only to tell you that you’ve got a reduced limit once you’ve opened the account – don’t let them get away with it! Just because you’re a student doesn’t mean that they don’t need your custom -threaten to move to another bank if they don’t increase your overdraft, and see if that has an affect. Of course, you don’t have to go through with your warning, but it often pays to keep them on their toes.
A word of warning – if you go over your agreed overdraft amount, Halifax will charge you £28 per month, RBS £10 per month, so it’s best to keep an eye on your account.
Talking of which, both of these accounts also offer internet and telephone banking – if you’re not already using these, you should become familiar with logging in and checking your account regularly, as this will help give you an idea of where you are with your money, and how you can save money by identifying unneeded spending.
Another thing to look out for is the incentives used by banks to lure students to their accounts – don’t be blinded by the offer a free MP3 player or some quick cashback. It’s far better to go for an account with a higher interest-free overdraft, for example, that will save you much more money in the long run (enough to buy an MP3 player?). Choose your account on the financial features first, any incentives should be an added bonus.