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Your Money > Northern Ireland Articles > Student Accounts
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By Emma Tyrrell
The sickening wait for A Level exam results is almost over. Eight days from now the grades will start plopping onto doormats throughout England, Wales and Northern Ireland, and the scramble to take up university places will begin in earnest. You choice of student bank account might not feature that highly in those uni dreams, but with debt now afflicting 90 per cent of all students, the account you choose could help cut the size of your personal debt mountain. Banks know that if they snare us young, the chances are we'll stay with them for life, or at least a good chunk of it, so they're eager to sign up all those new students. The big high street banks in particular are likely to have stalls at the Freshers' fairs in the first week. Sandwiched between the rugby club (drink your own weight and then throw up in a bucket), drama club (Friel and floaty skirts), and tiddlywinks society (what?) stalls, the bank manager will sit, looking friendly and approachable, and brandishing his free gifts. From MP3 players and CDs, to railcards and two-for-one nightclub entry, the big banks are spilling over with free gifts to try and lure students into choosing their account. But however tantalising these offers may be, they could end up costing you if the account comes with poor overdraft facilities. The accounts with the cheapest overdrafts could save you enough money to buy some of the advertised freebies several times over. Most student accounts now come with an interest-free overdraft facility, but they vary in their generosity. Abbey, Barclays, HSBC, Lloyds TSB, and Smile all offer up £1,000 in the first year, while Natwest and Royal Bank of Scotland are a little more giving with their £1,250 facility. However, the best interest-free offers are from Halifax and Bank of Scotland, which allow up to £1,750 in the first year, and Northern Ireland's First Trust Bank, which allows up to £1,850. Interest-free overdraft limits tend to rise after your first year at university. Again, the most generous are from Halifax or Bank of Scotland, which allow up to £1,900 in year two and £2,100 in year three. Yorkshire Bank and Clydesdale Bank student accounts have no interest-free overdrafts. Both charge 5.9 per cent on authorised overdrafts up to £1,000 and 8.03 per cent up to £3,000. But also important are the interest rates you pay on unauthorised overdrafts. You'll be hit with these if you haven't organised an interest-free authorised overdraft, or if you go over it. Rates vary from a whopping 33.51 per cent with Clydesdale, to a more lenient 14.8 per cent from HSBC. A first year student with a £2,000 overdraft would therefore be paying £275 interest a year with Barclays (which has a 27.5 per cent unauthorised overdraft rate), £148 interest a year with HSBC, £139.30 with Clydesdale or Yorkshire (on their authorised rates), and 60.50 with Halifax or Bank of Scotland (£250 unauthorised overdraft at 24.2 per cent rate). As far as the freebies go, one of the best offers is probably NatWest's free five year Young Person's railcard, which would normally cost £100 and saves you a third off rail tickets. NatWest's unauthorised overdraft rate is a not too horrendous 17.81 per cent, but its interest-free overdraft limit is only £1,250 in the first year, so if you're likely to be more overdrawn than that, you could be better off long term with the higher limit on the Halifax account. Other decent freebies include HSBC's £50 cash offer, probably preferable to the alternative 10 CDs or 512MB MP3 player (especially when many students may already have a much larger capacity iPod). Barclays' free three year National Express coach card, saving you up to 30 per cent off coach tickets, may initially seem attractive, but is only actually worth £30. Most of the banks which don't offer eye-catching freebies do offer commission-free travel money, but don't be swayed by this, as commission free travel money is readily available elsewhere. Also be wary of the discount offers promised by some banks. Royal Bank of Scotland's student Royalites account, for example, offers 20 per cent discount off certain books, CDs, DVDs, videos and computer games, as well as money off holidays and theatre tickets. These have to be bought through the Royalties Membership Service, however, so it is possible that you would find the same goods as cheap through other sellers. The two-for-one entry to any of 350 UK nightclubs, however, could prove attractive for party going students, as long as they can concentrate on partying with that 29.84 per cent unauthorised overdraft rate hanging over them. Many accounts come with credit cards, but with rates around 18 or 19 per cent, students should really make the most of their interest-free overdraft limits and student loans before they start hitting the plastic. We'll revist student finances in the coming weeks to take a look a fees, loans, social security and tax credits. To search for student current accounts go to Yahoo!'s Banking Centre |
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