Going to university, what accounts do I need?

kkid

I am going to university in September and need to sort out my accounts.


I currently have a standard HSBC current account as well as a savings account with about £1000 in it that my Mom opened for me years ago.


The savings account has an interest rate below the rate of inflation so theoretically I am losing money by having it in this, right?

What type of savings account do I need as a student for this cash?
What has the best rates of interest with the amount of money that i will be storing in it?


Also, do I need to change my current account?
Is a student account better than a standard current account?
If so, where is best to open one?

Do I have to close my current HSBC account in order to open a student account elsewhere?


I'm a banking newbie, sorry.

CLAPTON

a student bank a/c is a good idea as they come with benefits
but you usually can't open one until you get your result in august

probably easiest is to ask HSBC for their student a/c but compare the various offerings before deciding

often you will be eligible for student credit card when you open a tsudent bank a/c.
used properly (i.e. always paying in full each month)a CC can be useful

there is no need to close HSBC a/c if you choose a student a/c elsewhere, in fact two bank accounts can be useful

is your savings a/c register as being paid gross rather than with tax deducteded? (have you filled in a R85?)

the best rates of interest change frequently so check the savings section of this website

iamtrev79

A student account will probably come with an interest free (or without fees) overdraft that will increase for each year you are at University. This could be a good thing for when you are stuck for money, but could also see you get into more debt while at Uni, so advisable not to abuse it if you do open a student account. You can probably just convert your existing account to a student account somehow - by going into the bank and confirming your studies with them.

plunt

if your good with money management then do the following. If not then ignore it and stick to just using your own account

---

Open a student account with the BIGGEST free over draft facility. I did this with halifax and still have my £2600 interest free over draft with them . (will have to repay it a year or so after uni, so not much time left for me)

Stick this in a savings account. I so happen to use various accounts but one example is a nationwide flexdirect account giving you 5% interest

I then walked into another bank and get their student account which gave me £1500, and did the same so have had approx £3-4k over draft facility for 4 years of uni. + 1 year afterwards earnign rates that averaged around 5% (due to rates being faaaaar better when i first started uni!)

Just remember never to use the money if you want to do this right and not end up with a massive pile of debt!

Best of luck

P

kkid

ok, so I should open a student bank account based on the highest (Guaranteed?) free overdraft whether or not it is HCBC doesn't matter?

Is it worth, if the best is not HSBC, to convert my current HSBC account to a student account and have 2 student accounts? Or keeping it as it is?



Now with the savings accounts?
What am I actually searching for?
They seem to have weird terms that I don't understand e.g. "Easy access", "ISA" etc...

Herbalus

Remember it's quite early for student accounts. You usually can't open them unless you show them letters from your university confirming your place, which won't happen for most just yet. Don't decide on an account yet - there could be offers and deals to be had.

If you stay with HSBC there's no real reason to keep your other account - but occasionally banks on occasion seem unable to do simple things like that, so you may have to open a new account and close your current account if you so wish.

What you're searching for in savings depends what you want. Have a look at the guides on this site.

Easy access = you can access the money whenever you want. It's the opposite of fixed term savings, where you cannot access the money (without interest penalties) within 1 year/2 years/3 years etc.

An ISA means you don't pay tax on the interest, but as a student I doubt you'll earn more than £9,440 a year so don't worry about that.

kkid

I cannot understand how you can save up money in these savings accounts.

The advertised rates of interest are generally about 2.25% AER for a good account. But the UK inflation rate is 2.7% at the moment. Therefore each year you are losing 0.45% of your money in real terms.

Herbalus

kkid wrote: »

I cannot understand how you can save up money in these savings accounts.

When you are 5, you save up by putting money in a piggy bank.

When you are 18, you save up by putting money in a savings account.

What else do you expect? Investments? S&S ISAs? How many 18-year-olds are going to invest?

It is more a case of having a pot of money to buy a car/spend at uni/go on holiday.

innovate

Have you seen the article on the main site http://www.moneysavingexpert.com/students/Student-bank-account

innovate

kkid wrote: »

I cannot understand how you can save up money in these savings accounts.

The advertised rates of interest are generally about 2.25% AER for a good account. But the UK inflation rate is 2.7% at the moment. Therefore each year you are losing 0.45% of your money in real terms.

That is true to some extent if you are using you own money. But if you can use the bank's money (via your free overdraft), you can make a few bob in interest.

If you are using your own money and don't put it into an account that earns interest, your money loses value even faster.

kkid

innovate wrote: »

That is true to some extent if you are using you own money. But if you can use the bank's money (via your free overdraft), you can make a few bob in interest.

If you are using your own money and don't put it into an account that earns interest, your money loses value even faster.

So is it worthwhile spending maybe half of my total overdraft as a small investment into another account to make a profit?

Is this legal?