Swot up on student finance

Don’t leave it until the last minute and end up rushing your decision about who to bank with. Compare accounts now so you get the one that works best for you.

For many cash-strapped students the account offering the largest interest-free overdraft will be the main priority as it will help keep borrowing costs down.

Most banks limit the amount they will lend interest-free in year one, which is a sensible move – with limits typically between £1,000 and £1,500. Be aware that you have to apply for any overdraft limit – it’s not automatically set up on your account.

Barclays, Nationwide and HSBC all offer up to £2,000 interest-free in year two and £3,000 in year three, whereas TSB, Santander and Lloyds only offer a maximum of £1,500 in year three.

Having to pay 8.21% interest on that extra £1,500 for TSB, plus a £6 usage fee each month – could set you back more than £190 in 12 months.

All the banks will look to woo you with freebies but a higher interest-free overdraft limit will be the smarter financial move.

If the free overdraft isn’t a priority, Santander offers a free four-year 16-25 railcard while NatWest/RBS has a four-year National Express Young Persons Coach card, giving a third off fares. Avoid taking out a credit card unless you trust yourself to use it wisely – by that we mean paying the balance off in full every month so you don’t get hit with interest charges. Don’t be tempted to use it as an extension of an overdraft and student loans – your budget will be stretched to breaking point if you have to fork out interest charges of 20%-plus. Also, get to grips with your credit record. Up until now you probably haven’t borrowed any money or appeared on the electoral register but, from the age of 18, that changes. Get a free copy of your credit record and credit score from Totallymoney or ClearScore – it’s definitely worth signing up to one of these services and keeping an eye on it. Future lenders will refer to it when deciding whether or not to agree applications for everything from mobile phone contracts to mortgages.

Unless you draw up a budget of your incomings and outgoings, you could soon get in a mess and be forced to go cap in hand to your parents for help.

Budgeting isn’t fun or sexy but it’s an essential life skill that will save you from worry and being hit with bank charges. Creating a spreadsheet on a laptop will help ensure you have a handle on your money matters and know how much you’ve got to last you until the end of term. around £50,000 in student loans, many parents and students are anxious. The key thing to remember is that though total debt figures are high, it’s the amount you repay that’s important to understand.

Repayments on student loans begin in the April following graduation, but only if you’re earning more than £21,000. If you are earning less you don’t need to make repayments.

Repayments are calculated at 9% on everything you earn above £21,000 – so, if you earn £31,000 you’ll pay £900 per year – deducted in equal monthly instalments of £75 by your employer direct from your pay.

Any balance on student loans after 30 years is automatically written off, won’t appear on your credit record or be passed to debt collectors.