Frequently Asked Questions About Student Accounts

If you are going away to college or university, you are likely to be managing your money on your own for the first time in your life. This can be empowering but also scary at times. Here are some answers to questions that you may have about student accounts.

Im about to go over my overdraft limit. What should I do?

It is always a good idea to talk with your bank before you go over your overdraft limit. If you are about to exceed your interest-free overdraft limit for the first time, the bank may extend it, especially if your next maintenance loan payment is due to be paid in the near future. Even if the bank refuses to extend your interest-free overdraft, it may offer you an authorised overdraft at a preferential interest rate for students.

If, however, you do not contact your bank before exceeding your overdraft limit, it is very likely that your bank will charge you an unauthorised borrowing fee. You will also have to pay a higher rate of interest on the money you borrow. Unauthorised borrowing can be very expensive, so always make sure that you visit your branch or give your bank a call before you go over your overdraft limit.

My bank has offered me a student credit card. Should I accept the offer?

In general, credit cards are not a good idea for students because there are much less expensive ways of borrowing money, such as an interest-free overdraft or an authorised student overdraft.

A student credit card could perhaps be a good idea in certain circumstances. For example, if you are studying abroad as part of your course, a credit card that is accepted overseas may be the most convenient way of paying for certain goods and services. However, if you are using your credit card abroad, be aware that extra charges may be made for foreign currency transactions.

My bank has refused to extend my student overdraft. Are there any other low-cost ways of borrowing money?

The easiest way of borrowing extra money would be to ask your parents or other family members for a loan. If they are unable to help you, you may be able to gain additional funding through a scholarship, bursary or award. These are offered by many educational trusts and charities, as well as colleges and universities. It is a good idea to research all possible sources of funding open to you.

If you have run into financial problems and are wondering if you will be able to complete your course, you may be able to apply for help from the Access to Learning Fund. Each application is considered on a case-by-case basis. Have a chat with student services at your college or university, if you would like to apply.

At all costs, avoid student payday loans. Several companies have begun to offer payday loans to students at astronomical interest rates which sometimes exceed 4,000%. This is definitely by far the most expensive way of borrowing money and will only lead to substantial debt and money worries.

How can I ensure that my maintenance loan lasts for the whole term?

It can be difficult to ensure that the money you receive from your maintenance loan lasts you for the whole term. Many students tend to spend a lot in the first few weeks and then live on beans and toast for the rest of the term.

However, if you set up a budget, you should be able to work out how much money you have to live on each week. If you dont spend any more than that and perhaps keep a certain amount for emergencies, the money you receive from your maintenance loan should last for the whole term.

Find out as much as you can about budgeting and draw up your own budget. Advice on budgeting is available free-of-charge on the Internet, as well as spreadsheets that help you to keep track of your spending. Good money management is a skill that will be valuable for the rest of your life.

Becoming a student is a huge life change and managing your money is just part of this change. It may take some time to adjust to your new life as a student and you may meet some financial challenges along the way. However, if you learn how to control your finances, you should enjoy your time at university even more.

Sam Jones, the author, has been trying to compare prices with uSwitch to find the best interest rates for student accounts.

 

 

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