Current Account for 18 yr old - tips/suggestions?

Star2018

Can anyone suggest a good current account for an 18 year old as the A+L premier is for over 21s as far as i can see. I am looking for an account offering a small 0% overdraft (to cover dds if there is a problem)? To be honest im not to sure what to look for, but i think this is what i need. I am employed by the way earning £15,000 a year if that helps.

any tips or suggestions are much appreciated!

Helix

You can get the A+L Premier 21 account for 16-21 year olds. You get 10% interest on balances upto £1000 for the first year. I don't think you will be able to get an interest free overdraft anywhere unless you are a student.

http://www.alliance-leicester.co.uk/current-accounts/premier-21-account.aspx

Star2018

Just looked it says . . .

Earn a market-leading rate of 10.00% AER (fixed for one year) on balances up to £1,000 and 0.10% AER (variable) on balances over that amount.
Get a Visa debit card making it easy to shop online and in the high street.
Get an exclusive linked PlusSaver paying 5.25% gross each year/AER (variable) on balances up to £50,000.
You can have access to your account 24 hours a day using the internet, phone and mobile banking as well as access to any Alliance & Leicester branch. You must have internet access to see your statements.
Get a 0% EAR typical overdraft. If you use the overdraft we will charge 50p a day for up to 10 days each month, (up to £5 a month). There is a maximum overdraft limit of £2,500.
Win a day with one of two celebrities in our Celebrity Master Classes when you open or hold a Premier 21 Current Account. Visit prem21.co.uk to find out more.

Does this mean that everytime i go overdrawn they will charge me? I thought if it was an agreed overdraft as long as you stayed within your overdraft limit you weren't charged for using it ? im new to all this so excuse my ignorance!!

dwh_3

You aren't charged fees for going into your arranged overdraft, but you are conventionally charged interest on it. So say you're overdrawn by £100, and your arranged overdraft rate is 10%. Each day that you're overdrawn, they'll work out what one day's worth of the 10% of the £100 is (about 2.6p), and write it down. At the end of the month, they'll add that amount (about 80p by now) to how much you owe.

Alliance Leicester have a slightly different approach; rather than working out some % of what you owe each day, they say "if on any day you're at all overdrawn, we'll charge you 50p. Up to a maximum of £5 a month". For some people, this is a good deal (if you're overdrawn by a lot of money, or at a high interest rate, such that you're paying more than £5 of interest a month, and if you're overdrawn more than 10 days a month). If you're *not* paying at least £5 a month on your overdraft (which I'm guessing being 18 you're likely not to be), then this probably isn't the best overdraft for you.

You've probably heard about 0% overdrafts, which genuinely do cost nothing while they're 0%; those are generally attached to student accounts (actual, enrolled in university course, students; not just a college/school), and while you're a student, if you have one of these accounts, up to your arranged limit, there is absolutely no charge (but when you graduate, they start charging you interest, so you don't really want to have an overdraft when it isn't 0% any more, if you can at all help it).

Of course *always*, if you go over your limit, the banks *will* charge you (right now probably about £35, though a big court case is trying to deal with it)... The first time you go over, if you talk to the bank nicely, they may possibly cancel the charge, but don't rely on it.

The best way, if you at all can, is not to have an overdraft. I would suggest getting the Alliance Leicester account and keeping it in credit (with £1000, if you can, but don't bother putting any more in; you don't earn interest on it, so have another account too), and if you really need an overdraft (Do you? Think about it honestly, do you need one? What for?), find a bank that will offer you the lowest % on it...

It's worth thinking also about whether you want money in savings and overdraft; generally, it's better to use money in savings, than save money up and owe money (unless you want to start stoozing, but that's a whole other game), because the interest you pay on the overdraft will be higher than the interest you make on the savings (but that isn't always true; check the numbers).

Star2018

the reason i wanted a overdraft was just as a safety net really as im taking on my own bills now eg. phone, internet so if there wasn't enough in my account i had a small overdraft to cover them rather than being charged. Thanks for explaining that to me, it makes loads more sense now! I think it might be a good idea to open a A+L account and put a £1000 in it as 10% is quite a good rate i think, and then i can move it in to a savings account/isa when the deal finishes in a year. And il be on the look out for another current account with a small low interest overdraft.