Spender or saver – what type of student are you?

University entrants must get their calculators out to pick a bank account

THE stampede for university places will soon be over for this year’s school leavers. What follows is often a first taste of financial independence, starting with the choice of a bank account. LAURA SHANNON looks at the best deals for students – based on what type of customer they are.

BIG BORROWER

Best accounts: HSBC

and Halifax

AN OVERDRAFT can prove a flexible way to borrow money either over a short or long period at university. If it is set at zero per cent interest you repay only what you take out – not a penny more.

But use it wisely. Once you hit a given limit additional borrowing is either not allowed or is costly.

Andrew Hagger of financial research firm MoneyComms says: ‘The ability to borrow large sums interest free is still the key benefit for students. With Halifax and HSBC you can borrow up to £3,000 with no interest charges.’

A big overdraft is useful if you can’t spare time for a job while you study, or if parents can’t help out financially.

But despite HSBC’s and Halifax’s generous limits, not everyone will get the maximum. The size of an overdraft will be ‘subject to your circumstances’ or even ‘account conduct’.

Independent financial analyst David Black explains: ‘Lenders want to see a track record of handling credit responsibly. However, students typically have little or no credit history, making it difficult for lenders to assess them. This could result in rejection for credit, or a lower than expected overdraft limit being offered.’

HSBC will, however, apply an automatic overdraft facility of at least £500 when a student account is opened and will throw in a free £60 Amazon gift card too.

PRUDENT STUDENT

Best accounts: Santander, RBS/NatWest and Lloyds

SHREWD budgeters wanting to avoid the temptation of overspending may be better off with a lower overdraft limit.

And such students will prefer a perk that keeps on paying. If this is you, consider Santander’s 123 student account. It comes with a free, four-year 16-25 Railcard, which cuts a third off rail fares. This could cost up to £120 otherwise.

Railcards also trigger discounts on days out and dining with selected companies through its own rewards scheme.

The overdraft limit on the Santander account is £1,500 for three years, rising to £1,800 and £2,000 for years four and five respectively for longer stretches of study. But £500 needs to be drip fed into the account each term. Alternatively, RBS and its sub- sidiary NatWest start with an interest-free overdraft limit of £500 in the first term, rising to £2,000, and come with a free National Express Young Persons Coachcard, giving a third off coach fares for four years.

There are 20 campuses where National Express picks up students direct from the university, including Warwick and Lancaster.

Lloyds adopts a tiered approach to overdrafts. It starts with interest-free borrowing of up to £500 in the first six months, rising to £1,000 in months seven to nine and £1,500 after that. In years beyond the third, typically up to six, you can raise the overdraft to £2,000.

A free NUS extra card is included in the deal and is valid for three years. The card gives students discounts at more than 170 shops both on the high street and online, including Amazon, Apple and Odeon cinemas.

SENSIBLE SAVER

Best accounts: Santander, TSB and HSBC

SAVERS are a rare breed on campus – there won’t be many students looking for the best interest rates on surplus cash.

But for those who are, TSB pays 5 per cent on positive bank balances up to £500 – an effective maximum bonus of £25 for the year.

Santander pays 1 per cent for sums between £100 and £200, 2 per cent for sums between £200 and £300, and 3 per cent for balances between £300 and £2,000.

HSBC pays 2 per cent for balances up to £1,000, but this is only for the first year.