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Student Bank Account
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Student Bank Account

Written by Sam | January 1, 2020

A student account is designed exclusively for university students. They are based on the standard accounts offered by banks, however, students are also treated to benefits including freebies and interest-free overdrafts for a certain period of time! 

You will need to prove your student status when opening your account or else you can’t get a student bank account!

Gimmicks & Incentives

Beware of the student bank account gimmicks When choosing your bank account, it is good marketing to offer some sort of incentive in order to take the deal. This is what they are doing, make sure you get the best deal and that is likely to be an interest-free overdraft. Offers including free products, travel discounts, cash rewards, and other “exclusive” deals may sound tempting but you need to be smart.

Interest Free Overdraft

The best thing about a student account is that money borrowed through an overdraft has 0% interest. With an interest-free overdraft, you pay back nothing more than what you borrow. This is unique to student bank accounts!

An overdraft on a normal account can have hefty charges as soon as you go over and you will be charged interest per month every month you are in your overdraft.  If want to make use of the free money while you have it, you could put that money into an account that generates money. This means you are making money off the bank’s money and you don’t pay anything for it. Please be aware that if you try this and lose money, you are still expected to pay the money back. You MUST do your research before you implement this kind of strategy.  Beware that the 0% interest period is not forever!

Check The Over Draft Amount

The Overdraft? The advertised student 0% interest overdraft is often the maximum they offer (hence the “up to” wording). For many banks, this amount is only available in your final year at university and only to students with a decent credit rating.  Just because you have an overdraft doesn’t mean you should automatically use it on buying lots of items you don’t need. If you can live without going into it then we recommend that.

Having a clean credit score is a really good thing to have, especially as a student!  

Repayments

Know when & how you pay them back Sure, you probably won’t have to repay your overdraft until after you graduate, but the sudden demand for £3,000 is difficult to find.  So don’t treat it as free money and plan ahead, which starts with understanding the conditions, just like we say when you want a house, always read the contract! If it’s a 3-year deal, make sure you have your money out by the last 3 months and paid off early. Late charges in your credit history are hard to get rid of!

Credit Rating

Student account overdrafts are a form of borrowing, so you’ll be credit scored when applying. The quality of your score can determine how much overdraft you’ll be offered. You can raise your chances of approval by knowing your own credit score and taking steps to improve it.

A credit score is what banks use to see how risky we are when they lend money to us & how likely they are to get it back. If you don’t pay your money back on time or ever, your credit rating will be low and banks won’t touch you.

Your credit score is something you need to keep safe at all times!!

Documents You Need To Open A Student Account!

Luckily, there’s not too much! However, at the least UK students will be required to show:

  • One or two forms of photo ID
  • Proof of address
  • Proof of student status

Most banks now allow you to apply online for a student bank account and you can sign up in a few minutes! 

Once you’ve opened a new account, be sure to update Student Finance of your new bank account details.

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