Student Bank Accounts
Student Bank Accounts – Where Should Students Do Their Banking
The average student leaves university £12,000 in debt. Yet there’s no shortage of banks eager to get them to open a student bank accounts. Here’s a quick guide to what they have to offer young students up and down the country…
WHAT SHOULD I CONSIDER HAVING A STUDENT BANK ACCOUNT? Student bank accounts : offer interest-free overdrafts and will try to attract custom with incentives such as free travel insurance and discounts on anything from meals out and clothes to computers and tablets. And other financial benefits. Although ‘freebies’ are appealing, more important is how generous the overdraft facility is, and how reasonable interest rates are if you go over the interest-free limit If you overstep your level without telling the bank, it will hit you with interest of up to 30 per cent on any unauthorised overdraft. Banks usually offer between £1,000-£2,000 interest-free overdraft in the first year, increasing with each year of study.
HOW ABOUT STUDENT LOANS? Once an application from the local education authority is approved, the loan is made and administered by the Student Loans Company. All students are entitled to 75 per cent of the maximum sum (£5,050 in London, £4,095 elsewhere), and the rest depends on financial circumstances. The interest rate on repayments is in line with inflation. Pay-back time begins in the April after graduation if gross annual earnings exceed £10,000, and is usually collected by the Inland Revenue at source from the employer. Latest figures show that 82 per cent of eligible students took out a loan, £3,130 being the average amount borrowed.
WHAT HAPPENS AFTER I GRADUATE? Most banks convert your student account into a graduate one, often charging less interest than on standard accounts, although not always as preferential as when you where a student.
So there you have it, a quick guide to student bank accounts brought to you by Moneyhitman.com