Guest post written by Push a non-profit organisation which has been running funny, inspirational live sessions in schools since 1993. Find out more about what Push does here
As a student, you'll need to be besties with your bank. Scary thought, we know – at times, it may feel like cuddling up to a rabid dog.
Not that banks are nasty to students. It’s just that most students are scared of talking to their bank because they owe them so much money and the bank has the power to cut off their cash supply.
In fact, most banks suck up to students like they’re millionaires (because they hope one day that’s exactly what they’ll be – or, at any rate, they know they’re likely to be richer than non-grads). To entice students to open accounts, banks offer them freebies, good deals and, more importantly, free overdrafts. This is, basically, a way of lending you money. For free.
Living off of a student loan alone is only really enough for those weird people whose powers of budgeting defy imagination. So borrowing from the bank is a necessity for most students.
Normally, if you want to borrow from a bank, they charge you for it. But for students – as long as they remain students – the big banks offer interest-free overdrafts of up to £3,000 throughout your course. Some may even oblige with more, if you ask really nicely.
It’s best to get chummy with your bank from the start. If you've already got a good relationship with a bank you might be tempted to stick with your existing account, but you could be cutting yourself short. Make sure you switch to a student account to get the perks, and do a proper scout around the competition for the best deal.
Also, always let them know what your situation is, however bad it gets. They don’t often cut students off, so long as they're acting responsibly.
So… which bank?
You may have had a bank account since the tooth fairy gave you 10p for your first milky peg, but becoming a student gives you a great opportunity to review the situation.
Banks usually change their student package every year, so if you're looking ahead to next year, details might not be out till next summer. Sadly most have now shut down the loophole whereby you could open five accounts, kit yourself out with railcard, headphones, cinema vouchers and maybe a bit of cash, then scarper from all but one of the freebie-offering accounts.
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They now require that you keep your custom with them exclusively and make it part of the agreement when you join up.
You may already have a bank account you are quite happy with. You may also have just happened to stash your cash throughout your teenage years with the bank that does the tippermost, toppermost account to suit your student needs. But really, what are the chances of that?
Have a scout around at what the different banks are offering. Here are a few of the things to consider:
- Look out for special offers and incentives. And that’s ‘look out’ in both senses of the phrase. Wanting your banking custom in future years (when you're hopefully raking it in), the banks have all sorts of honey traps to entice the unsuspecting student: electrical gadgets, cinema vouchers, railcards, chucking an extra 50 quid in your account to sweeten the deal.
- Free gifts may sound good, but search out the ones with lasting benefits – some of the discounts on books or travel could end up being of greater value after a few years.
- Like someone on a Paleo diet walking past the cake aisle at the shops, you can ignore all the goodies and make sure the account is one worth having. It’s not worth being duped by the offer of a cuddly Barney the Banking Bear if that means you’re stuck with an account that makes loan sharks look like goldfish.
- Check out which accounts have the best overdraft facilities. It's likely you'll end up in the red, but if you've got an interest-free overdraft, dipping into the red won't cost you extra.
- Look out for unauthorised overdraft charges. They're what the banks charge students who go over their overdraft limit without applying for an extension – so if you know you're the type to keep a slack hold on your finances, bear these charges in mind and opt for an account with lower unauthorised charges.
- Look at where the nearest branches in your university town are (or even on campus) – it’s all very well going for the bank down the road from your mum’s house, but not so good if you end up having to travel for an hour each time you want to get some face-to-face help once you’re at university.
If you do decide to stay with your current bank, let your bank manager know you're going to university and they’ll transfer your current account to a special student one and give you all the info you’ll need – and, hopefully, shower you with perks.
To take full advantage of any offers, try to join up with a bank at least a few weeks before starting uni (some are given on a while-stocks-last basis). It’ll also mean you avoid long queues at the bank at the beginning of term, you should get your plastic in plenty of time and you’ll have a chance to get to know the bank’s particular facilities and arrangements.
Most importantly, it’ll mean you can tell the SLC where to put your student loan.
When you join a new bank or transfer your account, you’d also better make sure the address on your account is where you’ll actually be living. You won’t realise how important this is until, perish the thought, something bad happens to your bank card (stolen, snapped, vanished into the abyss) and you need to order a replacement. It’s no help having the new card and lifeline posted to the ‘rents 100 miles away, but that’s what will happen unless you let your bank know otherwise.
Key thing to remember? When picking a bank, our top tip is to think about the long-term. The freebies are great for as long as they last, but a relationship with a bank is something you enter for the long haul. Who’s going to be offering you good deals in three years when you need to extend your overdraft for the ninety-third time?
Ultimately, you’ll be doing the bank a favour by opening an account with them so you hold all the cards. Don't forget that – they need you as much as you need them. In a few years, you'll no longer be a student with barely two coins to rub together, but an extravagantly wealthy graduate with years of fabulous earning power ahead of you. Or something.
Still feeling a bit frazzled when it comes to keeping hold of your cash? Head over to the Push.co.uk Money section for all the info you could need on banking, tuition and maintenance loans, budgeting and general student survival. We have tons of hard-earned advice for young people in our Student Zone, on everything from money to accommodation, welfare and choosing the right uni for you.