Bank Accounts
What is a student account?
Student bank accounts are similar to ordinary current accounts but with the added advantage of an interest free overdraft. It is essential that you open an account before you come to University as you will need to provide bank account details when you apply for your student loan / grant. The Student Loan Company (SLC) will pay your loan / grant in three installments directly into your bank account.
If you already have an existing bank account, you may be able to convert it into a student account. However, your current bank may not offer the best deal for you, so it's worth being choosy and doing some research.
Which account?
Choosing a bank near to the University campus means that you can make transactions and discuss things with them more easily. Also, banks near the University campus usually have a designated student adviser.
Most high street banks now offer incentives (cash, mobile phones, railcards etc) to encourage you to open an account with them. However, it’s a good idea to shop around before deciding on the best one for you. Although some banks will offer good incentives, try to look beyond them and remember that other banks may give you better long term facilities, such as a bigger overdraft.
Whichever bank you choose, bear in mind that you may need their support if you experience financial difficulty at any time. They will be more willing to assist you if you can show that you have a responsible attitude to borrowing and have not abused your account in the past.
Things to consider when chosing an account:
Branch location & facilities
· Is there a branch near enough for me to call in to discuss
my finances?
· Is there a cash point on campus or close to where I live?
· Can I use my cash point card at other banks' machines
without being charged?
· Do they offer Internet / telephone banking?
Overdraft facilities
· How much interest free overdraft do they offer?
· Does the amount increase each year?
· Can I extend my overdraft limit and how do I do this?
· Will I be charged if I go over the limit?*
· Always speak with your bank before going overdrawn as stiff
penalty charges are usually imposed on unauthorised overdrafts.
Incentives
· Will I receive interest on credit balances?
· Cash? Young Persons Railcard? Mobile phone? MP3 player?
· Decide which will be best for you financially
Advice and support
· Is financial support easily available?
· Do they have a designated student advisor?
Credit cards
· What is the credit limit on the card?
· What is the interest rate?
Planning for when you graduate
· What kind of terms will I be offered?
· Most banks offer cheaper overdrafts and graduate loans
to consolidate overdrafts and other debts (see below).
· How long after I graduate can I expect to get preferential
graduate terms?
Bank charges
· Does the bank charge for services? (Most banks will not charge for their services whilst you remain in credit or stay within an agreed overdraft limit)
Other things to consider
· What savings facilities and incentives are on offer?
· Will I be charged commission on travel money? (Some banks do
not charge students.)
Building Society accounts
Building societies normally offerthe same services as banks and building society student accounts usuallyoperate in same way. If you have an existing building society account or you are looking changing to one, it is worth checking that your building society account is able to receive your student loan / grant payment without problem.
Graduate bank accounts
Your student account and facilities will be available for the entire time you are an undergraduate student. Shortly after you have graduated, your student account will be closed. When this happens you may be required to pay off any interest free overdraft you still have outstanding and this could also make it difficult to leave your bank at this point. However, most banks enable you to convert your student account into a graduate account and this may even happen automatically.
Things to consider
Overfdraft
· Is it interest free?
· What is the limit?
· How long will it be available for after you graduate?
· Does it decrease each year after graduation?
· Will you be charged if you go over your limit?
Credit cards
· What is the credit limit on the card?
· What is the interest rate?
· Some credit card companies will transfer your existing balance to theirs whilst offering 0% interest for a fixed period. This means that it is possible to transfer your credit card balance and avoid paying interest (other transfer charges may apply).
Graduate loans
· Graduate loans are specifically designed for graduates and differ
from normal personal loans.
· They are usually at lower interest rates than normal personal loans.
· You won’t need to secure the loan on property to be eligible.
· Delayed payments are offered by some banks - for example, you may not have to start repaying the loan until 3-6 months after you have received it.
1Adapted from: Hot Courses Student Money Advice @ http://www.hotcourses.com/studentmoney/
How to open a student account
To open a student account you will need to produce the following information:
· A copy of your Financial Notification award letter from Student Finance England*
· Photographic identification - usually your passport or full
driving licence.
· Confirmation of your home / non-term time address
· Confirmation of your term time address – a Tenancy Agreement
You may also need:
· Confirmation of your student status – your offer letter from
the University
You may also need:
· Confirmation of your student status – your offer letter from
the University
Having trouble opening a student account?
Student accounts are offered on the understanding that your Student Loan / Maintenance Grant is paid directly into that account.
If you have not taken out a Student Loan or receive no Maintenance Grant you may find it difficult to open or convert your existing account to a student account. In this case you may have to open an ordinary current account. Overdrafts may not be interest free and other charges may apply.
Basic accounts
If you have a poor credit rating, you may also find it very difficult to open a student account and might instead have to look at opening a basic bank account.
Basic bank accounts let you pay money in, get cash out using a cash card and pay bills by direct debit. Basic accounts will also accept BACS payments (the method used to pay your Student Loan/ Grant into your account).
Basic accounts don't usually let you overdraw and if you pay bills by direct debit you must make sure that there is enough money in the account to pay them. If you do not have the money in the account the bill will not be paid and you could be charged a fee by the bank. See the BBA link at the bottom of this oage for details of basic bank accounts (PDF file) and the banks and building societies that offer them.
Points to remember
· You will be expected to have an agreed overdraft facility before making an application to the Access to Learning Fund (ALF).
· If you have an overdraft and go over your limit you will be faced with substantial charges for every time you misuse the account. You might also find that your bank freezes your account and expects you to pay your overdraft back.
· Credit cards can help you budget if used wisely but you need to think very carefully about a whether you really need one? It will be another bill to pay at the end of every month. Remember that interest is often added daily and if the full amount is not repaid at the end of each month then interest will rapidly start to build up.
· Remember credit cards have to be repaid - they are not another form of income.
Related links
British Bankers Association (BBA) - Bank Accounts for Students
