Banking, loans and cards

Take your time to find the best student bank account

Getting a bank account sorted out is one of the first financial moves made by many students.
But with the new academic year set to get under way soon, freshers are being warned to spend some time looking for the most suitable account, and not to simply jump at the first offer they see.
Banks know that someone signing up for an account as a young adult might never switch banks, and they are keen to get your business early in the hope that one day you’ll use the bank to take out a mortgage, a business loan, insurance, investments and so on.
That’s why they sometimes offer freebies to students who sign up – they are counting on their investment in you paying off handsomely over the next few years or even decades.
But you should look past these introductory offers as these are unlikely to be the key factors when it comes to a bank account. Instead, things such as the overdraft limit and the cost of going into the red are probably more important. For example, if you think you are going to be overdrawn, you might be tempted by a bank that offers an interest-free overdraft of up to £3,000 instead of one that offers up to £2,000.
On the other hand, if you think you’re going to be in credit for all or most of your time at university, take into account the rate of interest you’ll get when you’re in the black. A half-decent return on your money could be worth a lot more than a free railcard that you might get for opening an account, but that you then never use.
“The student banking market is big business for banks because they know that once they’ve got a student as a customer, they could be a customer for life,” says Kevin Mountford, of Moneysupermarket.
“Many banks have a presence during freshers’ week to tempt students with special deals there and then, instead of advertising them online.
“However, it’s worth thinking beyond just the freebies. Instead, freshers should take time to compare what’s on offer and work out the best deal to suit the way they will use their account.”