Money Saving Tips- Unleash your Inner Banker!

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Despite banker stereotypes, they are bound to become an important part of your financial life- whether you like it or not! But instead of just relying on them, and settling for the first account that comes your way, I am going to teach you how to make smart decisions yourself. Having the right type of bank account and using it properly will ensure that you protect your finances not only as a student, but also for the long term.

 uos banks

Why should I get a student bank account?

Student bank accounts may not be suited to everyone as they tend to have very low interest rates, however for the majority of students, they offer benefits in terms of extra funds, as well as benefits and freebies. Most student accounts offer interest free overdrafts, meaning you can borrow up to £3000 (depending on the bank) without having to pay back interest. Many students don’t realise that this overdraft  will last until a year after graduation.

How do I chose the best deal?

A lot of student bank accounts come attached with freebies and benefits- for example the RBS offers a student discount card for essentials such as laptops and insurance, and Natwest offered a free 16-25 railcard last year! Whilst freebies can be an added bonus, don’t store too much stock in them- far more important is the benefits of the account itself. Most people tend to base their decision on the size of the overdraft available. HSBC and Halifax offer the highest overdraft, up to £3000, whilst other banks such as Natwest has a tiered system based on your year of study.

student banking 2

NOTE: although the size of overdraft available can be important, and perhaps necessary depending on your financial standings, it is important to remember that these accounts quote ‘up to’, meaning that the full amount won’t be available to everyone. Also, it isn’t really the healthiest way to set out relying on the existence of a large overdraft- you will have to pay it back sooner or later!

What is credit rating and how can it affect me in the future?

Ok, so now we turn our attentions to the long term repercussions of a student bank account. Credit rating is defined as:

An estimate of the ability to fulfil financial commitments, based on previous dealings.

-which basically means that in the future, it could affect the products available to you such as loans and credit cards.

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Because of the way student accounts work, it is unlikely that they will affect your credit rating too much, UNLESS you go over your overdraft. This is something that should be avoided at all costs, but if it is unavoidable in the worst case scenario, at least consult with your bank first, to discuss your best options.

Also, another thing to avoid is extra borrowing on credit cards and short term loans. These will certainly not be interest free, meaning you will have to pay back what you borrowed at an extortionate rate, and failing to do so may adversely affect your credit rating for any future borrowings.

It’s simple really:  as a general rule, just don’t spend what you don’t have; official student loans are designed to get you by, so with some budgeting you shouldn’t have to even consider extra borrowing.

short term loan

Should I stay with the bank I am with now?

Although there is nothing wrong with staying with your bank, you should really base this decision on the best bank account- whoever it is with. Many people base their decisions on the locality of the bank, but Southampton has them all either on campus or in the city centre, so this should not affect your decision- especially with the emergence of internet banking.

Besides the merits of the student account itself, you may also want to consider extra facilities such as mobile banking, fraud check and any other bonuses- for example Natwest offer a free emergency cash service. It’s also a good idea to chat with family members, or look online to judge the reputation and customer service of the bank. Below are a few links to helpful comparisons:

http://www.moneysupermarket.com/current-accounts/student-bank-accounts/

http://www.theguardian.com/money/2012/aug/10/best-student-bank-accounts

http://www.money.co.uk/current-accounts/student-bank-accounts.htm

Should I have a separate savings account?

This is really a personal decision, as it depends on how much money you already have saved, and  the amount of your income. As with any decision, there are things to consider; the advantages of a savings account are that you can set aside some cash for the future, keeping it separate and therefore unspent (in theory), as well as gaining a higher rate of interest. However, depending on your spending habits, and your income, you need to seriously consider if it is realistic and justifiable: what is the point of having it if you continuously need to transfer money from it anyway?

student banking 3

How can I make banking easier?

Despite the popular view of out of sight, out of mind, it is crucial to regularly keep an eye on your bank account. This will help you keep up your budget, as well as checking for possibilities of security issues. Today there are so many ways to bank- one of the easiest ways is to do it online. Online Banking is an easy way to check your account, and with a pin sentry you can also transfer money to other accounts from the comfort of your own home.

online banking

Downloading a mobile banking app is also a great way to keep an eye on funds on the go- particularly when shopping! Finally, it may be an idea to set up a direct debit/ standing order for any monthly costs such as rent. Doing this will mean you won’t have to worry about remembering to transfer the money every month. For most banks, you should be able to set up a standing payment online, or if not visit your local branch.

Should I buy all of the add ons?

At the time, it may seem like a good idea to purchase all of the add-ons to an account- especially student insurance. But, before you rush into this, check with your parents to see if your possessions are already included in their contents insurance, as this will save you a big cost. If not, then it is advisable to purchase student insurance, as it will probably come discounted with the student account, and adding your possessions to your parents’ insurance may affect their no claims bonus and  premiums.

We’d love to hear your own money saving tips, tweet them to us @WessexScene or @KerrySclater

Next week is aimed specifically at Freshers, watch this space!

 

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