Students- Uni-eed to Check Overdraft Rates
CHESTER, England, August 13, 2012 /PRNewswire/ --
- Avoid getting drawn in by free offers - make the most of interest free overdraft rates
With university tuition fees increasing again this Autumn, students need to make sure they make every penny count, starting with the right bank account for their needs. Britain's number one comparison site MoneySupermarket offers tips for bagging the best bank account deal and looking beyond the tempting 'freebie' incentives offered by providers.
Manage your overdraft limit
Student life can be costly, which means dipping into an overdraft can often be inevitable. HSBC and Halifax offer interest-free overdrafts of up to £3,000 over the duration of your course, compared to other providers who offer up to £2,000. Those needing an overdraft should ensure they only apply for an amount that suits their budget and not be tempted to overspend- it will have to be paid back eventually! Most banks won't offer the full overdraft facility in one go, it is usually tiered depending on the length of the course.
Check unauthorised overdraft interest rates
Students likely to go over their authorised overdraft would benefit from getting clued up on the costs of doing so beforehand. The amount charged for using an unauthorised overdraft varies greatly across providers. For example, Lloyds TSB has an 8.2 per cent EAR for its student account, while Halifax charges 24.2 per cent. Other providers, such as Santander, charge a one off payment of £5 per day, capped at 10 days per month.
Budget, Budget, Budget!
University is often the first time school leavers will manage their own finances, so getting into a habit of budgeting from the offset is essential. Setting aside rent money into a separate savings account such as The Post Office's Online Saver 6, which pays a rate of 3.01 per cent, until the rent due date will help to prevent it from being dipped into and getting left short. Student current accounts with free text alerts such as Lloyds and Barclays will help to keep control of finances even on the move.
For students who tend to stay in credit, most student current accounts pay just 0.1 per cent on balances, although Santander and HSBC offer two per cent on amounts up to £500 and £1,000 respectively.
Account benefits and 'freebies'
While many providers offer benefits such as discounts on shopping, travel or possessions insurance, it is worth checking whether you will genuinely use them to measure their value - taking a minute to shop around for these products may also help you get a better deal elsewhere. Spend time looking at all of the features on accounts, and not just the freebies.
Kevin Mountford, head of banking at MoneySupermarket, said: "With university tuition fees set to increase yet again in the Autumn, there has never been a more crucial time for students to plan ahead and consider their finances before signing up to an account. It's important to get the ball rolling before the excitement of fresher's week kicks in, so university life can be enjoyed to the full, without financial worries when it's too late.
"Overdrafts can be confusing for school leavers heading to university, as many will not have had one before. Many students will end up relying on this facility to make ends meet between loan payments, so securing one with a decent limit is crucial. However, students should ensure they can realistically pay back any money they borrow from the bank. It's also worth noting that zero per cent deals on overdrafts tend to expire after graduation, so students need to plan how they are going get themselves back into the black, or could risk facing additional interest payments.
"Most providers offer a number of benefits such as worldwide travel insurance, laptop discount and mobile phone insurance, free music downloads or an NUS or Young Persons Railcard. Although these freebies may be useful, the value of them will be low compared to interest-free overdrafts, which should be the key focus for those considering a student account this summer."
Notes to Editors:
*Student accounts
Credit Interest Free
Interest Overdraft Limits
Rate (subject to status Unauthorised
Provider Account (AER) and year of study) EAR Benefits
Up to
GBP3,000
interest-free
overdraft;
Guaranteed
GBP500
overdraft at
account
2.00% opening;
(up to 25% off
GBP1,000 in Lonley Planet
first year travel
of guides;
Student university) No overdraft
Bank 0% arrangement
HSBC Account thereafter GBP500 - GBP3,000 19.90% fees
GBP50
1.00% cashback if
(up to GBP5 a day an account is
GBP500) (capped at opened before
Student 0% 10 days each 30th November
Santander Account thereafter GBP1,500 - GBP2,000 month) 2012
Student
Current GBP1,000 - GBP3,000
Halifax Account 0.10% (from 16th August) 24.20% N/A
GBP75 off a
holiday
booking with
student
travel
specialists
STA Travel;
Free NUS
extra card
for three
years;
Discounts on
over 150 high
street and
online
brands.
Free text
alerts,
Internet and
Lloyds Student Telephone
TSB Account 0.10% GBP1,500 - GBP2,000 8.21% Banking.
10% discount
on Student
Possessions
Insurance
until 31st
December
2012;
10% discount
on Student
Travel
Insurance
available
until 30th
June 2013;
Free text
alerts about
your account
to your
Personal mobile;
Student Reserve Mobile
Barclays Additions 0.00% up to GBP2,000 GBP22 Banking.
Existing
current
account
customers who
upgrade to a
Student
Account will
receive a
free 4 year
Student 16-25
NatWest Account 0.00% GBP1,000 - GBP2,000 17.81% Railcard
Student
Royal Royalties
Bank of Current
Scotland Account 0.00% GBP500 - GBP1,000 17.81% N/A
Sourced by MoneySupermarket on 02.08.12
MoneySupermarket.com compares (at 20th July 2012)
- 102 car insurance providers and 81 home insurance providers
- 11 broadband providers and 18 energy providers
- 32 unsecured loan and 6 secured loan providers
- 60 mortgage lenders and 28 credit card providers
- 67 savings providers and 37 current account providers.
- Over 1,600,000 mobile phone deals
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For further information please contact:
Paul Lawler
PR Manager Financial Services
+44(0)1244-370317
+44(0)787-237-9545
paul.lawler@moneysupermarket.com
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