Banking
Whether you are coming to university straight from school, returning to education as a mature student, or joining UWS as an international student, the world of student banking may be a bit different to what you have been used to in the past. We've put together some information to help you get to grips with banking as a student and find the best deals going.
Banking jargon buster
Overdraft
An overdraft is a limited amount of money the bank will let you spend even if you don’t have it in your account. For example, a £250 overdraft means that when your balance reaches £0, the bank will let you continue to spend up to an additional £250. This is borrowed money, which you will have to pay back. See the 'Overdrafts' section for more information.
Debit card
This is the handy bit of plastic that you use instead of cash. The money comes straight out of your bank account.
Credit card
This is a very different bit of plastic that uses money that you have borrowed to pay for items. You get charged interest each month and will need to remember to pay the bill.
Direct debit
This is a way to pay for a regular bill without having to think about it. Companies take the money you owe them on an agreed date. The amount can vary though, so you will still need to keep track of your account balance to ensure you have enough available to pay the bill.
Standing order
This is similar to a direct debit but the amount does not vary.
Student bank accounts
Student bank accounts are designed to suit the needs of those in higher education and are offered by most high street banks.
Like normal bank accounts, you can pay money in and take it out, but there are usually additional benefits such as interest-free overdrafts, for the time that you are a full-time student. You’ll get a debit card, which allows you to pay for things in shops and online without the need to withdraw cash.
Money Saving Expert has information on student bank accounts and the different perks on offer.
Buyer beware
Banks often offer any number of freebies and perks to get you to open your account with them. These range from free railcards to gig tickets. Try not to be enticed unless the offer is something that will genuinely save you money.
USwitch can help you assess your options and choose the best student bank account for you.
Overdrafts
Many student accounts provide a set level of overdraft on an interest-free basis for the duration of your course. This is the main perk of getting a student account in the first place.
Most students need an overdraft and it’s usually the cheapest way to get money after your student funding. Having an overdraft doesn’t mean you have to use it, but it does offer a little help if you are struggling.
It is important to remember that this is not free money, the bank is just lending it to you and you will need to pay it back at some point.
Make sure you know how long your bank will allow you to keep your interest-free overdraft. This will help you plan for paying it back before they start charging interest, which can be as much as £1 per day.
Student banking tips
Never go over your overdraft
This rule applies to everybody, not just students. If you go beyond your overdraft limit you will get charged. Check your balance regularly to avoid accidentally going over the limit, and always ask for help should you anticipate a problem.
Prepare to be credit checked
Whether it’s an overdraft, credit or store card, the bank will run a credit check to see if you meet their criteria. A credit check looks at your past financial habits. If you don’t meet their criteria, you may be turned down.
Don't pick a bank just because it's close
You can withdraw cash free of charge from any bank's ATM and almost any bank gives online access so it doesn’t matter which bank has the closest branch. It's more important that you choose a bank that offers the best services for your situation.
When you graduate, switch to a graduate account
Many banks will give you the chance to switch from their student account to a Graduate Account within a set period after you graduate. Most of these accounts still include a 0% interest period for 1-3 years after graduation, allowing you to repay your student overdraft gradually. The overdraft limit tends to decrease year on year, so it’s important to reduce your overdraft balance by paying it off as soon as you can afford to. Remember that any overdraft balance remaining when the 0% interest period ends will start to attract interest.
Monitoring your account
It is important that you always keep a close eye on your bank balance to avoid accidental overspends and foresee any potential financial problems. Technology is making it easier to do this with online banking and apps for your mobile device.
Bank accounts with benefits
Many banks now offer a range of accounts with various benefits. While these are a great way to get good deals on mobile phone, travel, breakdown and other insurance, they can be a waste of money if you don’t need or use these benefits.
Most of these types of account come at a cost, in the form of a monthly fee. The best way to determine whether the account is going to save you money, is to work out the annual cost and determine if you can get the freebies cheaper.
For example, if your account costs £10 per month, that is £120 per year. If the only benefit you would use is mobile phone insurance, can you get your phone insured for less than £120 a year? Probably.
Money Saving Expert has lots of advice to help you work out whether an account like this is worth it for you.
Review regularly
If you have lots of activity on your bank account, from direct debits to debit card payments, it’s easy to lose track of things. No matter your budget, regularly checking your account and cancelling unnecessary payments can save you a small fortune.
You’d be surprised how many people are paying for things they no longer use or need. Most commonly gym memberships, magazine/TV subscriptions and insurance for old items that are no longer used.
When auditing your bank account, ask yourself:
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Do I use it?
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Is it worth it?
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Can I get it cheaper elsewhere?
Explore your banking options
If you are looking for a bank account, you don’t have to limit yourself to the well-known high street banks. An increasing number of online-only banks are emerging such as Monzo, Revolut and Starling, giving you a variety of account options to help you manage your money. Do your research to find an account(s) that best suits you and your circumstances. You can find out more about digital banking here.
To set up a student bank account, you will usually need to provide your chosen back with:
- ID e.g. Passport and/or Driving Licence.
- Proof of address.
- Proof of student status e.g. confirmation of your place at UWS and/or current student funding award.
- International students will also need to provide your student visa.
International students will often need to make overseas transfers, so it’s important to check which accounts allow you to do this. Some banks will charge a fee each time an international transfer is made, so be careful to compare different accounts in detail before committing.
Some Credit Unions offer current accounts as well as saving and lending facilities. You can read more about Credit Unions on our saving money page.
Don't be scared to switch
While it used to be a tedious process to move your bank account, fraught with the danger of forgetting to change the details on one of your monthly payments, it’s now much easier.
Don’t be afraid to shop around and change accounts, especially if the service you get is not up to scratch or you would be better off with a different account from a different bank.
The Money Helper has some helpful advice on how you can switch accounts.