This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/money/2017/aug/19/how-pick-best-student-account-giveaways-interest-free-overdraft
The article has changed 5 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| A free railcard or a £2,000 overdraft? How to pick the best student account | A free railcard or a £2,000 overdraft? How to pick the best student account |
| (21 days later) | |
| School leavers found out this week which university they will be going to, and over the next month they and their parents will be wondering how on earth they are going to afford it. For many it will be the first time they run a proper bank account and look after their own money. So which account should a fresher choose? | School leavers found out this week which university they will be going to, and over the next month they and their parents will be wondering how on earth they are going to afford it. For many it will be the first time they run a proper bank account and look after their own money. So which account should a fresher choose? |
| Proximity of the bank and its branches may influence some; others will automatically go with the one their parents are with. But cool-headed students will choose an account on two things: the value of the interest-free overdraft on offer, and whether the giveaways are worth taking. | Proximity of the bank and its branches may influence some; others will automatically go with the one their parents are with. But cool-headed students will choose an account on two things: the value of the interest-free overdraft on offer, and whether the giveaways are worth taking. |
| What is the best overdraft deal? An interest-free overdraft means you can go overdrawn for free – ie, there will be no charges for going into the red, although you do, of course, eventually have to repay the money (and there can be painful costs if you go beyond your limit). There have also been some cutbacks by HSBC and Halifax this year, with no banks any longer offering £3,000 overdrafts to freshers. | What is the best overdraft deal? An interest-free overdraft means you can go overdrawn for free – ie, there will be no charges for going into the red, although you do, of course, eventually have to repay the money (and there can be painful costs if you go beyond your limit). There have also been some cutbacks by HSBC and Halifax this year, with no banks any longer offering £3,000 overdrafts to freshers. |
| Generally, students won’t get much more than £2,000 as an interest-free overdraft in year one, rising to £3,000 at some banks by year three. NatWest offers £2,000 in year one but it stays at that level the whole time you are at university. HSBC and Nationwide “Flexstudent” accounts offer £1,000 in the first year rising to £3,000 by the third year. | Generally, students won’t get much more than £2,000 as an interest-free overdraft in year one, rising to £3,000 at some banks by year three. NatWest offers £2,000 in year one but it stays at that level the whole time you are at university. HSBC and Nationwide “Flexstudent” accounts offer £1,000 in the first year rising to £3,000 by the third year. |
| Lloyds and Santander are the tightest of the big banks, both limiting their interest-free overdraft to a maximum of £1,500 over the three years of a conventional university degree course. Note that Lloyds phases in its deal – freshers get £500 for the first six months from account opening, £1,000 from month seven and only hit £1,500 from month 10. | Lloyds and Santander are the tightest of the big banks, both limiting their interest-free overdraft to a maximum of £1,500 over the three years of a conventional university degree course. Note that Lloyds phases in its deal – freshers get £500 for the first six months from account opening, £1,000 from month seven and only hit £1,500 from month 10. |
| There is also a question mark over whether you’ll actually be offered the maximum overdraft limit when applying. Nationwide has undertaken to promise that, so long as you don’t have credit problems and stick to the account requirements, you will get the maximum overdraft on offer. But other banks will credit score you from the start and you may find the amount offered is much less than the table (below) suggests. | There is also a question mark over whether you’ll actually be offered the maximum overdraft limit when applying. Nationwide has undertaken to promise that, so long as you don’t have credit problems and stick to the account requirements, you will get the maximum overdraft on offer. But other banks will credit score you from the start and you may find the amount offered is much less than the table (below) suggests. |
| Who has the best freebies? There are three major giveaways on offer. HSBC’s is the simplest – a £60 voucher to spend at Amazon. Santander has grabbed probably the best freebie off NatWest – a 16-25 Railcard lasting four years. These cost £30 a year so the giveaway is worth up to £120. It gives students a third off standard anytime, off-peak, standard advanced and first class advanced fares (do any students travel first class?). | Who has the best freebies? There are three major giveaways on offer. HSBC’s is the simplest – a £60 voucher to spend at Amazon. Santander has grabbed probably the best freebie off NatWest – a 16-25 Railcard lasting four years. These cost £30 a year so the giveaway is worth up to £120. It gives students a third off standard anytime, off-peak, standard advanced and first class advanced fares (do any students travel first class?). |
| NatWest is offering a four-year National Express Coachcard. It normally costs £10 a year or £25 for three years, so the maximum it’s worth is £35, and gives students a third off the price of standard coach fares at any time. | NatWest is offering a four-year National Express Coachcard. It normally costs £10 a year or £25 for three years, so the maximum it’s worth is £35, and gives students a third off the price of standard coach fares at any time. |
| All the banks say they offer students cashback deals at various retailers but these are hard to quantify, so we have not added them to our table. | All the banks say they offer students cashback deals at various retailers but these are hard to quantify, so we have not added them to our table. |
| For those few with large credit balances Nationwide has the best deal with 1% interest on the first £1,000. But that’s only £10 a year, so hardly a deal changer. | For those few with large credit balances Nationwide has the best deal with 1% interest on the first £1,000. But that’s only £10 a year, so hardly a deal changer. |
| Should I choose the same bank as my parents? You might think dad’s 30 years at the local Lloyds means something, but not these days. Lloyds says: “There’s no impact, either positive or negative. Things like credit ratings are only impacted if there is a joint financial relationship – ie, a joint account. Otherwise, each customer is treated individually.” | Should I choose the same bank as my parents? You might think dad’s 30 years at the local Lloyds means something, but not these days. Lloyds says: “There’s no impact, either positive or negative. Things like credit ratings are only impacted if there is a joint financial relationship – ie, a joint account. Otherwise, each customer is treated individually.” |
| What if I’m starting an apprenticeship? Apprentices can obtain the same deal as students at some banks. HSBC will, from this year, offer the same benefits to those working towards a higher level apprenticeship. You have to be 18 or older and studying at foundation degree level (Level 4) or above. | What if I’m starting an apprenticeship? Apprentices can obtain the same deal as students at some banks. HSBC will, from this year, offer the same benefits to those working towards a higher level apprenticeship. You have to be 18 or older and studying at foundation degree level (Level 4) or above. |
| Which banks offer the best service? First Direct always tops the customer satisfaction tables but doesn’t offer a student account. MoneySavingExpert’s latest ratings, out this week, score Nationwide as next best, followed by Co-op and Santander. Bottom was Royal Bank of Scotland, with Barclays second-worst. A Which? survey also named First Direct top, followed by Nationwide then TSB and Co-op among the major banks. | Which banks offer the best service? First Direct always tops the customer satisfaction tables but doesn’t offer a student account. MoneySavingExpert’s latest ratings, out this week, score Nationwide as next best, followed by Co-op and Santander. Bottom was Royal Bank of Scotland, with Barclays second-worst. A Which? survey also named First Direct top, followed by Nationwide then TSB and Co-op among the major banks. |
| So which are the accounts to go for? | So which are the accounts to go for? |
| It’s a toss-up between Nationwide for great service, a good overdraft deal and the fact it’s a mutual, versus Santander for its railcard. Co-op and NatWest probably fight it out for bronze medal position in this table. | It’s a toss-up between Nationwide for great service, a good overdraft deal and the fact it’s a mutual, versus Santander for its railcard. Co-op and NatWest probably fight it out for bronze medal position in this table. |
| Counting college costs | Counting college costs |
| Parents need to set aside £163 every month from the day their child is born until they reach 21 if they are to cover the anticipated £51,000 cost of going to university, according to research by insurer Wesleyan. | Parents need to set aside £163 every month from the day their child is born until they reach 21 if they are to cover the anticipated £51,000 cost of going to university, according to research by insurer Wesleyan. |
| The amount needed rises to £226 a month if parents wait until their child reaches primary school age (five) before beginning to save. The research also found that if parents waited until their child was 16 they would have to find £808 a month. It’s little wonder that students without well-off parents are forced to take out large loans. | The amount needed rises to £226 a month if parents wait until their child reaches primary school age (five) before beginning to save. The research also found that if parents waited until their child was 16 they would have to find £808 a month. It’s little wonder that students without well-off parents are forced to take out large loans. |
| Vicki Wentworth of Wesleyan said: “With average university debt tipping the £50,000 mark, it’s understandable that parents might want to help. But it is a big financial commitment and the earlier they start planning and making the most of tax-efficient savings products – in particular using their full Isa allowance – the more affordable it will be over the long term.” | Vicki Wentworth of Wesleyan said: “With average university debt tipping the £50,000 mark, it’s understandable that parents might want to help. But it is a big financial commitment and the earlier they start planning and making the most of tax-efficient savings products – in particular using their full Isa allowance – the more affordable it will be over the long term.” |
| But the amount UK parents spend on their child’s education is only middling compared with the bills common in some other countries, according to HSBC research. It found that British parents spent £19,688 on their child’s education up to undergraduate level. This is less than a fifth of that spent on average by parents in Hong Kong (£103,932), but higher than the £12,960 French parents spend. | But the amount UK parents spend on their child’s education is only middling compared with the bills common in some other countries, according to HSBC research. It found that British parents spent £19,688 on their child’s education up to undergraduate level. This is less than a fifth of that spent on average by parents in Hong Kong (£103,932), but higher than the £12,960 French parents spend. |