Choosing a good bank account for students is a prudent decision towards financial stability while at college and beyond. Student bank accounts provide banking services and interest-free funds in overdrafts for regular student expenses as well as managing their finances for a period after graduation.
It is important that a student first identify what he or she needs the account for before shopping for the right bank. Before signing up, ascertain that what the bank claims to offer is actually in the fine print and that you fully understand implications. Here are five tips to help you choose a student bank account.
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- Go for larger overdraft amounts
- Read fine print to avoid ambiguity in expectations
- Clarify charges on overspending and any other fees
- Ease of access to your preferred bank
- Your student account after University
Student bank accounts come with great benefits including much-needed interest-free overdrafts for college expenses and other freebies like long-term Railcards
and other gift cards. Considering that traditional student loan companies charge interest currently, this flexible bank alternative is a welcome relieve to students.
Since interest is not a factor, go for a student bank account offering larger overdraft limits for maximum benefit. If you are good at investing money wisely, you could put part of the overdraft in an interest-earning account for extra income by the time payment falls due in what is sometimes called ‘stoozing.’
The brochures and adverts may say one thing and actual contract forms another. Banks may use such terms as “up to” in setting attractive overdraft limits, but which leave room for variation of terms.
The bank may advertise say “up to $3,000.00” overdraft limit that, in practice, does not guarantee the maximum figure for the student. Instead, negotiate for guaranteed limit, including incremental percentage, if any, over the expected period to avoid falling short of expectations. This guarantees financial stability and structured planning, allowing the student to focus on studies.
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It is prudent practice to stay within overdraft limits to avoid incurring bank charges and any wise student will strive to keep it that way. However, it is equally wise to prepare for any eventualities by understanding the bank’s charges on exceeded overdraft limits before signing up and ensure that these are clearly defined in the terms.
Having an understanding of these punitive implications can help a student avoid impulsive spending that could lead to a high debt burden. Equally, check for accounts that earn interest on positive balances as an added benefit.
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Ease of accessibility is key to the choice of bank for a student domiciled in one locale. You do not want to go for a bank with no local branch, however good their products as this may entail traveling at cost.
A bank that you can drop in over lunch break or in between classes for quick personal customer service, including the initial contact when opening the student account is ideal. However, even more preferable is a bank on e-platform offering online service through smartphone apps that any student will find quite convenient to operate.
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You should use your student bank account to proof financial credibility and merit a good start to earning a high credit score by managing it well. This means that you select a student account that retains 0% interest for a few more years after graduation to allow you to repay comfortably before switching to mainstream accounts.
Clarify such terms as grace periods allowable after graduation, if there will be any interest, and what other benefits you will enjoy beyond college. How you handle this final stage of a student bank account will determine your future creditworthiness.
Conclusion
University students definitely need affordable funds for college requirements, including upkeep, and banks offer a solution to this through student accounts. If well used, these accounts help set students on sound financial footing through college and after graduation as they start out in life.
Students, however, must choose the overdraft products offered carefully and, even more importantly, use the funds wisely to enhance their credit score rating upon exiting college. While at it, find out if your preferred bank offers student credit cards and go for it to start managing card credit this early.
Author Bio:
Emma Rundle is an academic expert who’s working with a coaching institute to prepare students for competitive exams and help them secure admissions in top colleges. She also works as a freelance academic writer and handles subjects in finance and economics. In her free time, she practices mindfulness, plays tennis and watches TV.