Is it worth getting a Student Bank account?

spammy29

My daughter is determined to not get in anymore debt than she has to agree watching me struggle for years juggling and upgrading my debts, I'm now in a Debt Management Plan. My daughter doesn't want to go down the same road so is keeping her normal account with no overdraft facility. Is a student account better than a plain old bank account or is it a case of more debt in the long run?

agrinnall

Having an account that offers an overdraft doesn't mean that it has to be used. Willpower and personal responsibility are what matters.

Feral_Moon

Some accounts also offer a free NUS card which is well worth getting.

Voyager2002

She is right to be very careful about debt, but will almost certainly need to spend more than her student loan before she graduates. It would be better to use an interest-free overdraft and then make repaying that before interest starts being charge a high priority rather than financing her studies with other, high-interest, forms of credit.

The alternative would be partly for her to lead a frugal life as a student, which is a good idea. However, she might also need to spend so much time earning money that her studies suffer, which would be unfortunate in the long run.

dm19

I have just finished first year, and had a £1000 overdraft with HSBC which I never used. However (without realising it at the time) having the overdraft and using the included credit card responsibly (only use up to £100 and pay it off in full) I have undoubtedly improved my credit report, which will probably help me in the future at some point.

Luckystar

I was wary about the overdraft on student accounts for my son too, but he has opened one with Nationwide. The current account he already had offered no extra benefits as he didn't earn enough part time, so we looked at it that he gains not just the interest free overdraft but 1% interest when in credit (up to £1000) prime status to open other Nationwide products and the goody box. He plans not to use the O/D facility but it's there for him as a safety net in emergencies.

ani*fan

Feral_Moon wrote: »

Some accounts also offer a free NUS card which is well worth getting.

Lots of banks offer freebies for students. I got a free rail card with my santander account which I've used loads. I think it's wise to make use of these things, whether or not you plan to use the overdraft.

I also think working out a year long budget with your daughter is a good idea, and if there needs to be debt accrued to manage during term time, then it can be interest free with a student overdraft and paid back during the holidays if your daughter is working.

Yes you need discipline but to be honest, I don't know how it's possible for students to get through their undergrad degree without acquiring debt. Are tuition fees alone not extortionate now? I'm very glad to have done my studying when I did.

Your daughter's lucky to have you thinking about this with her. I wish my parents had done the same.

Jlawson118

I think a normal account would be better as they don't come with an Overdraft as standard. But Agrinnall is right in saying that just because an overdraft is there, doesn't mean it has to be used. It might do your daughter good to be able to have the will power not to use it because it will build up that strength.

I opened a student account earlier this year half way into my first year of university but I didn't really see the benefits of it, and I shut it down shortly after, I get much better benefits and offers from my normal bank accounts. But then again I've been banking for about three years now.

Mine with HSBC offered me a credit card, but I rejected it because I held one elsewhere, and I think I had a choice over the overdraft as well but I accepted it, they gave me £500 interest free but didn't use it. And I know Santander have a few good offers too.

It's really is worth shopping around and seeing the benefits of these various accounts. Depending what your daughter wants from a bank, a student account might offer more, or a normal account might offer more

Kayalana99

ani*fan wrote: »

Yes you need discipline but to be honest, I don't know how it's possible for students to get through their undergrad degree without acquiring debt. Are tuition fees alone not extortionate now? I'm very glad to have done my studying when I did.

Your daughter's lucky to have you thinking about this with her. I wish my parents had done the same.

Difference here is good debt and bad debt, in this situation the student finance covers her fees so she can pay it off long term when her income is enough to cover it, and if never is - it gets wiped clean after many years. So won't see her struggling to pay it.

Bad debt of course, would be living out of an overdraft she can't pay back.

bouncydog1

DD opened an HSBC student account as when she did it, it gave her a credit card, free travel insurance and an overdraft facility. she simply asked them to cancel the overdraft facility. The credit card had a £500 limit and as she had no earnings, she would not have got one otherwise. She used it to build her credit score. Interest was also paid on savings.

When she graduated it was transferred to a graduate account. The key is to teach your daughter to live within her means - cook from scratch, have a cheap sim, don't insist on the latest phone, get discounts on everything she has to buy. Chip in with other students to benefit from supermarket 3 for 2 offers, buy yellow sticker items etc.

WibblyGirly

I have one with Santander, I get a free overdraft (which I do live in, I'll admit!) a railcard and the benefit that it converts to a graduate account for 3 years which is still a free overdraft so I'll have 3 years to pay it off before I get charged though I'll obviously pay it off much sooner than 3 years I hope!