BANKS |
As a student, you will need to make your bank your friend. And, at times, it may feel like cuddling up to a rabid dog.
Not that banks are nasty to students. It’s just that most students are scared of talking to their bank because they owe them so much money and they know the bank has the power to cut off their cash supply.
In fact, most banks suck up to students like they were millionaires (because they hope one day that’s exactly what they’ll be – or, at any rate, they know they’re likely to be richer than non-graduates). To entice students to open accounts, banks offer them freebies, good deals and, more importantly, free overdrafts. This is, basically, a way of lending you money. For free.
Banks speak a language of their own, possibly invented by customer service experts in a secret underground facility beneath Alton Towers. At great personal risk, however, Push has acquired a black book containing translations of common terminology. Here are some extracts…
Not that banks are nasty to students. It’s just that most students are scared of talking to their bank because they owe them so much money and they know the bank has the power to cut off their cash supply.
In fact, most banks suck up to students like they were millionaires (because they hope one day that’s exactly what they’ll be – or, at any rate, they know they’re likely to be richer than non-graduates). To entice students to open accounts, banks offer them freebies, good deals and, more importantly, free overdrafts. This is, basically, a way of lending you money. For free.
Banks speak a language of their own, possibly invented by customer service experts in a secret underground facility beneath Alton Towers. At great personal risk, however, Push has acquired a black book containing translations of common terminology. Here are some extracts…
Living off of a student loan alone is only really enough for those weird people whose powers of budgeting defy imagination. So borrowing from the bank is a necessity for most students.
Normally, if you want to borrow from a bank, they charge you for it. But for students - as long as they remain students - the big banks offer interest-free overdrafts of up to £3,000 over your course. Some may even oblige with more, if you ask nicely.
The crunch comes, however, when you graduate. Unless you walk into a megabucks job, you’ll have your student loan to pay off, plus your bank overdraft. And that’s when the interest can start to rack up (although some banks offer helpfully slow repayment packages).
It’s best to get chummy with your bank from the start. If you've already got a good relationship with a bank you might be tempted to stick with your existing account, but you could be cutting yourself short. Make sure you switch to a student account to get the perks, and do a proper scout around the competition for the best deal.
Also, always let them know what your situation is, however bad it gets. They don’t often cut students off, so long as they're acting responsibly.
Normally, if you want to borrow from a bank, they charge you for it. But for students - as long as they remain students - the big banks offer interest-free overdrafts of up to £3,000 over your course. Some may even oblige with more, if you ask nicely.
The crunch comes, however, when you graduate. Unless you walk into a megabucks job, you’ll have your student loan to pay off, plus your bank overdraft. And that’s when the interest can start to rack up (although some banks offer helpfully slow repayment packages).
It’s best to get chummy with your bank from the start. If you've already got a good relationship with a bank you might be tempted to stick with your existing account, but you could be cutting yourself short. Make sure you switch to a student account to get the perks, and do a proper scout around the competition for the best deal.
Also, always let them know what your situation is, however bad it gets. They don’t often cut students off, so long as they're acting responsibly.
STUDENT ADVISORS
A fair few students haven't ever had to worry about pesky paying-in slips or meeting up with the bank manager to discuss switching their funds into a high-yield, high-risk offshore blah de blah. So having student advisors on hand to answer all your banking queries can only be a good thing.
It's worth bearing in mind that banks with branches on campus, or in the university town/city, will be geared up towards students and their needs. So if you stick with your existing bank and account for simplicity, only to discover your nearest branch is miles from uni, it may be worth considering switching to a more student-friendly bank branch.
Advisors are on hand to help students with money worries, overdraft extensions, budgeting and generally smile warmly, make you a cup of cocoa and tell you everything is goung to be alright. Oh, wait that's what your mum does.
Suffice to say, often student advisors are recent graduates, so they understand your plight and aren't there to say 'told you so'. If you have money worries or need to extend your overdraft they are there to, erm, advise you and make sure you borrow enough money to get by, without going further into the red than necessary.
It's worth bearing in mind that banks with branches on campus, or in the university town/city, will be geared up towards students and their needs. So if you stick with your existing bank and account for simplicity, only to discover your nearest branch is miles from uni, it may be worth considering switching to a more student-friendly bank branch.
Advisors are on hand to help students with money worries, overdraft extensions, budgeting and generally smile warmly, make you a cup of cocoa and tell you everything is goung to be alright. Oh, wait that's what your mum does.
Suffice to say, often student advisors are recent graduates, so they understand your plight and aren't there to say 'told you so'. If you have money worries or need to extend your overdraft they are there to, erm, advise you and make sure you borrow enough money to get by, without going further into the red than necessary.
overdrafts
An overdraft is a minus amount of money in your account. So an ‘overdraft limit’ is the sum that your bank has decided you’re allowed to take out of your account even though you haven’t actually got any money in there.
The overdraft is usually denoted by the letters ‘OD’ (or a minus sign, or something similarly alarming) on your bank statement. So, if the months go by and the amount in your account just seems to be growing, but there are these strange letters after the totals, it's time to start worrying.
‘£700 OD’ doesn't mean you've got £700 to splurge at the sales - it means you've probably done just that with the plastic and now you are overdrawn by £700 - i.e. you owe the bank all that wonga. So if you pay £150 into your account, you'll reduce the amount of money you owe so that you're only £550 OD. Or if you paid in £701, your balance would swell to the knee-buckling sum of £1 CR (CR standing for credit).
Most banks offer a free overdraft facility to students, up to a certain limit. This means that, so long as you don’t go over the limit, you won’t get slapped with any unexpected charges.
Always get official confirmation from your bank of what your overdraft limit is and make sure that it’s going to be enough. Depending on your year of study, the overdraft limit is usually between £1,000 and £3,000 (it grows as your student debts accumulate).
Most first years get between £1,000 - £1,500. If there’s any danger that you’re not going to be able to stick to the limit, you need to have a chat with your bank’s student advisor to arrange an ‘extension’.
A couple of don’ts (and these are big don’ts. DON’Ts, in fact).
Don’t wait till you’re nearly at your limit before trying to arrange an extension. You’ll be stuffed if they say no. You should be able to do the maths and – on the basis of what’s coming in (student loan and grant payments, part-time job wages, parental contributions and the rest of it) and what’s going out – work out whether your balance is going to drop below the limit.
They’ll be more likely to help you if you’re being responsible about it.
And don’t, under any circumstances, exceed your limit without getting authorisation to do so. Your overdraft is then no longer free and you get hit with huge charges and fines.
Because your bank thinks it's doing such a lovely thing not charging you for the overdraft, if you go over it without asking, they whack on a load of interest to pay - so if you have an inkling you might end up doing something a bit financially wayward check out which accounts have lower unauthorised fees.
After the fines for going over the limit, your bank will start to get extra cheeky - they’ll even charge for sending you a letter to tell you that you’re over your limit. Then they’ll fine you because you can’t pay the charges.
However, overdrafts do have to be paid back eventually and the bank theoretically has the right to ask for the money at any time. After you’ve graduated, most start charging interest (although often not immediately) and it doesn’t take long for overdrafts to become an expensive form of amusement.
So don’t get complacent about your overdraft – it’s certainly a lifeline for most students, but it’s not an automatic right.
Once you’ve signed up and completed all the necessary forms, your bank should send you written confirmation of your authorised overdraft limit (anything up to about £3,000, but usually less, especially if you're a first year).
If at any point you think you’re in danger of going over the limit, get in touch with your bank immediately. They’ll make an individual judgement based on your circumstances as to whether they’ll let you have more wonga or not.
Their decision will, in part, depend on how well you’ve looked after your finances to date and how much you’ve kept them in the picture.
Never, ever, ever go over your overdraft limit without permission. It’s just not worth it – you’ll be charged a bundle of interest and will lose a bunch of banking brownie points to boot.
Although having an overdraft is the least expensive and most convenient way of borrowing, never get complacent about being in debt to a bank. Treat them as if they were holding the rug under you feet and they could tug whenever they like.
The overdraft is usually denoted by the letters ‘OD’ (or a minus sign, or something similarly alarming) on your bank statement. So, if the months go by and the amount in your account just seems to be growing, but there are these strange letters after the totals, it's time to start worrying.
‘£700 OD’ doesn't mean you've got £700 to splurge at the sales - it means you've probably done just that with the plastic and now you are overdrawn by £700 - i.e. you owe the bank all that wonga. So if you pay £150 into your account, you'll reduce the amount of money you owe so that you're only £550 OD. Or if you paid in £701, your balance would swell to the knee-buckling sum of £1 CR (CR standing for credit).
Most banks offer a free overdraft facility to students, up to a certain limit. This means that, so long as you don’t go over the limit, you won’t get slapped with any unexpected charges.
Always get official confirmation from your bank of what your overdraft limit is and make sure that it’s going to be enough. Depending on your year of study, the overdraft limit is usually between £1,000 and £3,000 (it grows as your student debts accumulate).
Most first years get between £1,000 - £1,500. If there’s any danger that you’re not going to be able to stick to the limit, you need to have a chat with your bank’s student advisor to arrange an ‘extension’.
A couple of don’ts (and these are big don’ts. DON’Ts, in fact).
Don’t wait till you’re nearly at your limit before trying to arrange an extension. You’ll be stuffed if they say no. You should be able to do the maths and – on the basis of what’s coming in (student loan and grant payments, part-time job wages, parental contributions and the rest of it) and what’s going out – work out whether your balance is going to drop below the limit.
They’ll be more likely to help you if you’re being responsible about it.
And don’t, under any circumstances, exceed your limit without getting authorisation to do so. Your overdraft is then no longer free and you get hit with huge charges and fines.
Because your bank thinks it's doing such a lovely thing not charging you for the overdraft, if you go over it without asking, they whack on a load of interest to pay - so if you have an inkling you might end up doing something a bit financially wayward check out which accounts have lower unauthorised fees.
After the fines for going over the limit, your bank will start to get extra cheeky - they’ll even charge for sending you a letter to tell you that you’re over your limit. Then they’ll fine you because you can’t pay the charges.
However, overdrafts do have to be paid back eventually and the bank theoretically has the right to ask for the money at any time. After you’ve graduated, most start charging interest (although often not immediately) and it doesn’t take long for overdrafts to become an expensive form of amusement.
So don’t get complacent about your overdraft – it’s certainly a lifeline for most students, but it’s not an automatic right.
Once you’ve signed up and completed all the necessary forms, your bank should send you written confirmation of your authorised overdraft limit (anything up to about £3,000, but usually less, especially if you're a first year).
If at any point you think you’re in danger of going over the limit, get in touch with your bank immediately. They’ll make an individual judgement based on your circumstances as to whether they’ll let you have more wonga or not.
Their decision will, in part, depend on how well you’ve looked after your finances to date and how much you’ve kept them in the picture.
Never, ever, ever go over your overdraft limit without permission. It’s just not worth it – you’ll be charged a bundle of interest and will lose a bunch of banking brownie points to boot.
Although having an overdraft is the least expensive and most convenient way of borrowing, never get complacent about being in debt to a bank. Treat them as if they were holding the rug under you feet and they could tug whenever they like.
which bank?
You may have had a bank account since the tooth fairy gave you 10p for your first milky peg, but becoming a student gives you a great opportunity to review the situation.
The banks usually change their student package every year, so if you're looking ahead to next year, details might not be out till next summer. Sadly most have now shut down the loophole whereby you could open five accounts, kit yourself out with railcard, ipod, cinema vouchers and maybe a bit of cash, then scarper from all but one of the freebie-offering accounts.
They now require that you keep your custom with them exclusively and make it part of the agreement when you join up.
You may already have a bank account you are quite happy with. You may also have just happened to stash your cash throughout your teenage years with the bank that does the tippermost, toppermost account to suit your student needs. But really, what are the chances of that?
Have a scout around at what the different banks are offering. Here are a few of the things to consider:
Look out for special offers and incentives. And that’s ‘look out’ in both senses of the phrase. Wanting your banking custom in future years (when you are hopefully raking it in), the banks have all sorts of honey traps to entice the unsuspecting student: electrical gadgets, and cinema vouchers, railcards, bunging an extra 50 quid in your account.
Free gifts may sound good, but search out the ones with lasting benefits - some of the discounts on books or travel could end up being of greater value after a few years.
Or, like someone on the Atkins diet walking past the cake aisle at the shops, ignore all the goodies and make sure the account is one worth having. It’s not worth being duped by the offer of a cuddly Barney the Banking Bear if that means you’re stuck with an account that makes loan sharks look like kippers.
Check out which accounts have the best overdraft facilities. It's likely you'll end up in the red, but if you've got an interest-free overdraft, dipping into the red won't cost you extra.
Look out for unauthorised overdraft charges, too. They're are what the banks charge students who go over their overdraft limit without applying for an extension - so if you know you're the type to keep a slack hold on your finances bear these charges in mind and opt for an account with lower unauthorised charges.
Look also at where the nearest branches in your university town are (or even on campus) – it’s all very well going for the bank down the road from your mum’s house, but not so good if you end up having to travel for an hour each time you want to pay in a cheque once you’re at university.
Remember also that you’re likely to move house while you’re at uni – don’t just look at what’s plonked in the middle of the campus if most of the second and third year accommodation is a few miles down the road.
If you do decide to stay with your current bank, let your bank manager know you are going to university and s/he will transfer your current account to a special student one and give you all the info you’ll need – and, hopefully, shower you with perks.
To take full advantage of any offers, try to join up with a bank at least a few weeks before starting uni (some are given on a while-stocks-last basis). It’ll also mean you avoid long queues at the bank at the beginning of term, you should get your plastic in plenty of time and you’ll have a chance to get to know the bank’s particular facilities and arrangements.
Most importantly, it’ll mean you can tell the SLC where to put your student loan.
The banks usually change their student package every year, so if you're looking ahead to next year, details might not be out till next summer. Sadly most have now shut down the loophole whereby you could open five accounts, kit yourself out with railcard, ipod, cinema vouchers and maybe a bit of cash, then scarper from all but one of the freebie-offering accounts.
They now require that you keep your custom with them exclusively and make it part of the agreement when you join up.
You may already have a bank account you are quite happy with. You may also have just happened to stash your cash throughout your teenage years with the bank that does the tippermost, toppermost account to suit your student needs. But really, what are the chances of that?
Have a scout around at what the different banks are offering. Here are a few of the things to consider:
Look out for special offers and incentives. And that’s ‘look out’ in both senses of the phrase. Wanting your banking custom in future years (when you are hopefully raking it in), the banks have all sorts of honey traps to entice the unsuspecting student: electrical gadgets, and cinema vouchers, railcards, bunging an extra 50 quid in your account.
Free gifts may sound good, but search out the ones with lasting benefits - some of the discounts on books or travel could end up being of greater value after a few years.
Or, like someone on the Atkins diet walking past the cake aisle at the shops, ignore all the goodies and make sure the account is one worth having. It’s not worth being duped by the offer of a cuddly Barney the Banking Bear if that means you’re stuck with an account that makes loan sharks look like kippers.
Check out which accounts have the best overdraft facilities. It's likely you'll end up in the red, but if you've got an interest-free overdraft, dipping into the red won't cost you extra.
Look out for unauthorised overdraft charges, too. They're are what the banks charge students who go over their overdraft limit without applying for an extension - so if you know you're the type to keep a slack hold on your finances bear these charges in mind and opt for an account with lower unauthorised charges.
Look also at where the nearest branches in your university town are (or even on campus) – it’s all very well going for the bank down the road from your mum’s house, but not so good if you end up having to travel for an hour each time you want to pay in a cheque once you’re at university.
Remember also that you’re likely to move house while you’re at uni – don’t just look at what’s plonked in the middle of the campus if most of the second and third year accommodation is a few miles down the road.
If you do decide to stay with your current bank, let your bank manager know you are going to university and s/he will transfer your current account to a special student one and give you all the info you’ll need – and, hopefully, shower you with perks.
To take full advantage of any offers, try to join up with a bank at least a few weeks before starting uni (some are given on a while-stocks-last basis). It’ll also mean you avoid long queues at the bank at the beginning of term, you should get your plastic in plenty of time and you’ll have a chance to get to know the bank’s particular facilities and arrangements.
Most importantly, it’ll mean you can tell the SLC where to put your student loan.
picking a bank
Faced with the fountain of freebies and the glut of goodies on offer, it’s almost as hard to choose a bank as it was to choose a university.
They nearly all provide online and telephone banking services and most offer interest-fee prearranged overdrafts, preferential rates on loans and probably staff who’ll perform sexual favours. But don’t get suckered by the gimmicks.
It’s worth shopping around to get the best banking deal you can. The checklist below will help you ask the questions you should.
Before deciding, get answers to the following questions:
Other people – especially other students – may have useful tips. They may want to plug a particular bank to you or warn you off another one. Don’t necessarily take what they say at face value, but a tip’s a tip.
Besides, you may be able to get extra-special ‘family loyalty’ treatment if your parents or a friend recommends their own bank to you – ask them.
The top tip is to think about the long term. The freebies are all very well for as long as they last, but a relationship with a bank is something you enter for the long haul. Who’s going to be offering you good deals in three years when you need to extend your overdraft for the ninety-third time?
Ultimately, you’ll be doing the bank a favour by opening an account with them. In a few years, you will no longer be a student with barely two coins to rub together, but an extravagantly wealthy graduate with years of fabulous earning power ahead of you. Or something.
They nearly all provide online and telephone banking services and most offer interest-fee prearranged overdrafts, preferential rates on loans and probably staff who’ll perform sexual favours. But don’t get suckered by the gimmicks.
It’s worth shopping around to get the best banking deal you can. The checklist below will help you ask the questions you should.
Before deciding, get answers to the following questions:
- How much interest will you get on money in your account for the short period that you happen to be in credit (usually that’s only for a few weeks after getting your first student loan instalment)? The interest is often so small you can’t even fold it – making a separate savings account a wise move if you’re ever likely be in the black.
- What’s your maximum overdraft limit? And check it’s interest-free.
- How quickly do they expect you to pay off your debts and when?
- How nasty are the charges they slap on you for unauthorised overdrafts? They will be nasty, but some are the stuff of nightmares.
- What are the facilities like, such as the number and location of cash machines? Is there or will there be, a cash machine near where you go every day as a student (either on campus or wherever you’re living)?
- Is there a branch somewhere convenient?
- If you can’t get to a branch when it’s open, what other banking services do they offer – such as over the phone or on the internet? What can and can’t you do by phone or online?
- Do they charge anything if you use another bank’s cash machine and if so how much?
- Do they offer specialist advice for students and graduates?
- How easy is it to set up and cancel standing orders and direct debits?
- If you care, how sound are they? For example, do they have shady connections in other countries propping up dictatorships that abuse human rights?
- What freebies do you get and what are they really worth to you?
- Do they offer student bank loans beyond overdrafts, and on what terms?
- What support will they give you once you’ve graduated?
Other people – especially other students – may have useful tips. They may want to plug a particular bank to you or warn you off another one. Don’t necessarily take what they say at face value, but a tip’s a tip.
Besides, you may be able to get extra-special ‘family loyalty’ treatment if your parents or a friend recommends their own bank to you – ask them.
The top tip is to think about the long term. The freebies are all very well for as long as they last, but a relationship with a bank is something you enter for the long haul. Who’s going to be offering you good deals in three years when you need to extend your overdraft for the ninety-third time?
Ultimately, you’ll be doing the bank a favour by opening an account with them. In a few years, you will no longer be a student with barely two coins to rub together, but an extravagantly wealthy graduate with years of fabulous earning power ahead of you. Or something.
personal bank loans
If your overdraft and the student loan just aren’t going to cut it, you may be able to arrange a personal loan with your bank.
You borrow an agreed amount, over an agreed period and agree to repayments - which are usually agreed monthly amounts, at an agreed rate of interest. There’s a lot of agreeing to be done. So when choosing your bank, check that they are agreeable - that is they offer good terms for personal student loans.
Shop around, as it could save you money in the long run.
In general, banks aren't the best bet for long-term student borrowing – that would be overdrafts and student loans. But they’re better than other money-lending companies.
You borrow an agreed amount, over an agreed period and agree to repayments - which are usually agreed monthly amounts, at an agreed rate of interest. There’s a lot of agreeing to be done. So when choosing your bank, check that they are agreeable - that is they offer good terms for personal student loans.
Shop around, as it could save you money in the long run.
In general, banks aren't the best bet for long-term student borrowing – that would be overdrafts and student loans. But they’re better than other money-lending companies.
loan advice
Some people think that if they spread their debts around, borrow small amounts from a wide variety of different places, this will somehow be better than borrowing larger amounts from one or two places. Then again, some people believe Utterly Butterly is butter and that Elvis really is dead.
The more debtors you have, the greater the risk – better to stick with the student loan, the overdraft and, if absolutely necessary for specific situations, no more than one other reputable funding source (such as a student credit card for short-term cashflow shortfalls or a personal loan for a big single expense).
Any more than that and you will find it very difficult to keep track of your money and your borrowings, not to mention your repayments. If you fail to keep up repayments on just one loan, this could result in you being ‘blacklisted’ – which means the word goes round the credit companies, mortgage companies, banks, building societies and probably the local pub that you’re a financial leper who shouldn’t be trusted.
There’s no such thing as an official blacklist, but if you want credit, people have access to your ‘credit history’ and they’ll all make similar judgements about a dodgy past. It can take years to rub the slur from your good name.
Never borrow more than you can realistically pay back and don’t agree to anything that asks you to pay it back any sooner than you’ll be able. It’s all very well thinking you can worry about repayments later, but when they hit, they’ll hit hard.
Some companies will offer to ‘consolidate all your existing loans’ into one big loan (with ‘easy to manage’ monthly repayments). In theory it's an okay idea - it’s better to have a single payment of a fixed amount taken out of your account each month, rather than direct debits of various amounts flying at you throughout the month. But in practice, they’ll probably want a higher interest rate.
So keep to as few lines of debt as possible in the first place and ‘consolidation’ won’t be necessary. If possible, stick to the student loan from the start – relatively speaking, the interest rate is microscopic.
By the way, Elvis is alive and well and working for a branch of Lloyds TSB in Ormskirk.
The more debtors you have, the greater the risk – better to stick with the student loan, the overdraft and, if absolutely necessary for specific situations, no more than one other reputable funding source (such as a student credit card for short-term cashflow shortfalls or a personal loan for a big single expense).
Any more than that and you will find it very difficult to keep track of your money and your borrowings, not to mention your repayments. If you fail to keep up repayments on just one loan, this could result in you being ‘blacklisted’ – which means the word goes round the credit companies, mortgage companies, banks, building societies and probably the local pub that you’re a financial leper who shouldn’t be trusted.
There’s no such thing as an official blacklist, but if you want credit, people have access to your ‘credit history’ and they’ll all make similar judgements about a dodgy past. It can take years to rub the slur from your good name.
Never borrow more than you can realistically pay back and don’t agree to anything that asks you to pay it back any sooner than you’ll be able. It’s all very well thinking you can worry about repayments later, but when they hit, they’ll hit hard.
Some companies will offer to ‘consolidate all your existing loans’ into one big loan (with ‘easy to manage’ monthly repayments). In theory it's an okay idea - it’s better to have a single payment of a fixed amount taken out of your account each month, rather than direct debits of various amounts flying at you throughout the month. But in practice, they’ll probably want a higher interest rate.
So keep to as few lines of debt as possible in the first place and ‘consolidation’ won’t be necessary. If possible, stick to the student loan from the start – relatively speaking, the interest rate is microscopic.
By the way, Elvis is alive and well and working for a branch of Lloyds TSB in Ormskirk.
internet banking
Internet banking is becoming increasingly popular and increasingly handy as a way to pay bills, transfer money, check your balance, set up standing orders... you name it. Students can get in on the act as easily as anyone – not least because most universities provide free web access.
This means that rather than traipsing to your nearest branch and queuing up for hours behind someone with 4,317 pennies that need to be counted, you can check important finance stuff online or on an app instead. Further delaying writing that essay.
On occasion, you’ll need to talk to someone, especially if you want to give excuses or get advice. Nowadays, many banks offer a 24-hour telephone banking service (or at least a service beyond the usual nine to five).
Even so, the face-to-face contact of a student advisor who you recognise is still popular. It’s up to you.
This means that rather than traipsing to your nearest branch and queuing up for hours behind someone with 4,317 pennies that need to be counted, you can check important finance stuff online or on an app instead. Further delaying writing that essay.
On occasion, you’ll need to talk to someone, especially if you want to give excuses or get advice. Nowadays, many banks offer a 24-hour telephone banking service (or at least a service beyond the usual nine to five).
Even so, the face-to-face contact of a student advisor who you recognise is still popular. It’s up to you.
DEBIT, cash and credit cards
Most accounts come with at least one slice of plastic, but the cards themselves do different things. (Incidentally, make sure you sign the strip on the back.)
There are three main types of card - and like heavy metal-loving Gary, who cross dresses on Saturdays and calls himself Linda, some cards can be more than one thing at the same time:
In theory the money comes out of your account straight away. In reality it may take a couple of days to clear, so be sure you don’t have any debits waiting to come out when you decide you can't live without that gazillion pound handbag/PS4.
A debit card transaction shouldn’t be able to go through the till if there’s not enough cash in your account – but don’t try it, anyway. It’s just not worth ruining your favourite tee with sweat patches that look like you've been on a 10k run.
PIN stands for ‘personal identification number’. Please don’t say ‘PIN number’. It really bugs Push. The word ‘number’ is redundant. Thanks.
Beware of charges for using another bank’s cash machine. Most are happy to dole out the dough for each other for free, but not all. So you can intend to take out a tenner and end up with £12.50 coming out of your account.
Figure out what fees apply where. You’ll be told to look out for a particular symbol such as the Maestro, Link, Visa or Cirrus logos, so you know where your cash is 'free'.
Also, be wary of non-bank cash machines – that’s the ones you often get in corner shops, nightclubs, taxi ranks - the types of places where you are likely to want cash in a hurry and therefore are more likely to fork out the £1.75 plus fee. They should warn you about the charge before you decide to withdraw the cash.
Sometimes you’ll be stranded and using one of these is the only option, but otherwise, think twice about whether you really, really honestly do need that extra tenner before you make it to the bank next. Chances are, you won’t.
In fact, they’re not the same. It doesn’t matter how much money there is in your bank account if you’re using a credit card. Instead the money is added to your credit account and you get a bill at the end of the month for everything you spent on the card.
You can either settle up then or pay a minimum payment and let the rest sit there. This means you can whack a hefty amount onto your credit card without actually ever having said amount in your account - you can just keep stalling on paying it off. Push (and the whole economic state of the world after years of living on credit) reckon this is a bad idea.
If you leave a balance unpaid on your credit card account, it doesn't just sit there happily ever after, it accrues interest faster than an ant colony on its way to an exploded sugar factory. The interest is pretty eye watering too. It’s an expensive way of borrowing and not recommended for students as an everyday - or even every other day - solution. Use in emergencies only.
There are three main types of card - and like heavy metal-loving Gary, who cross dresses on Saturdays and calls himself Linda, some cards can be more than one thing at the same time:
- Debit cards
In theory the money comes out of your account straight away. In reality it may take a couple of days to clear, so be sure you don’t have any debits waiting to come out when you decide you can't live without that gazillion pound handbag/PS4.
A debit card transaction shouldn’t be able to go through the till if there’s not enough cash in your account – but don’t try it, anyway. It’s just not worth ruining your favourite tee with sweat patches that look like you've been on a 10k run.
- Cash cards
PIN stands for ‘personal identification number’. Please don’t say ‘PIN number’. It really bugs Push. The word ‘number’ is redundant. Thanks.
Beware of charges for using another bank’s cash machine. Most are happy to dole out the dough for each other for free, but not all. So you can intend to take out a tenner and end up with £12.50 coming out of your account.
Figure out what fees apply where. You’ll be told to look out for a particular symbol such as the Maestro, Link, Visa or Cirrus logos, so you know where your cash is 'free'.
Also, be wary of non-bank cash machines – that’s the ones you often get in corner shops, nightclubs, taxi ranks - the types of places where you are likely to want cash in a hurry and therefore are more likely to fork out the £1.75 plus fee. They should warn you about the charge before you decide to withdraw the cash.
Sometimes you’ll be stranded and using one of these is the only option, but otherwise, think twice about whether you really, really honestly do need that extra tenner before you make it to the bank next. Chances are, you won’t.
- Credit cards
In fact, they’re not the same. It doesn’t matter how much money there is in your bank account if you’re using a credit card. Instead the money is added to your credit account and you get a bill at the end of the month for everything you spent on the card.
You can either settle up then or pay a minimum payment and let the rest sit there. This means you can whack a hefty amount onto your credit card without actually ever having said amount in your account - you can just keep stalling on paying it off. Push (and the whole economic state of the world after years of living on credit) reckon this is a bad idea.
If you leave a balance unpaid on your credit card account, it doesn't just sit there happily ever after, it accrues interest faster than an ant colony on its way to an exploded sugar factory. The interest is pretty eye watering too. It’s an expensive way of borrowing and not recommended for students as an everyday - or even every other day - solution. Use in emergencies only.
deferment period
Slim Jim the fence owes Joey the knife £10,000. Joey gives him three days to come up with the money... or else. Minus the threat at the end, that’s a ‘deferment period’.
To put it another way, it’s a period of time that a bank gives you to either raise the funds to repay an overdraft or loan or, more usually, to find work.
When banks offer a deferment period, it tends to be more by way of a practical approach to debt management rather than a threat (as it is with Joey the knife).
Rather than immediately snatching every penny you earn and landing you in as much financial crap as a pair of wellies at Glastonbury, a deferment period helps you settle into a job and ease your way into repayments.
Banks usually give students a year or two (sometimes even three) after they’ve graduated before giving them a hard time about repaying their overdraft.
Don't get carried away with the apparent benevolence of your bank - in the meantime they're charging interest on what you owe and singing kerching.
If a bank doesn’t offer a deferment period to graduates, you may want to look elsewhere.
To put it another way, it’s a period of time that a bank gives you to either raise the funds to repay an overdraft or loan or, more usually, to find work.
When banks offer a deferment period, it tends to be more by way of a practical approach to debt management rather than a threat (as it is with Joey the knife).
Rather than immediately snatching every penny you earn and landing you in as much financial crap as a pair of wellies at Glastonbury, a deferment period helps you settle into a job and ease your way into repayments.
Banks usually give students a year or two (sometimes even three) after they’ve graduated before giving them a hard time about repaying their overdraft.
Don't get carried away with the apparent benevolence of your bank - in the meantime they're charging interest on what you owe and singing kerching.
If a bank doesn’t offer a deferment period to graduates, you may want to look elsewhere.
repayment holidays
A repayment holiday is similar to a deferment period, but usually shorter – a matter of a few months.
It’s a period when the bank will let you off of repayments while you’re having a hard time, so long as you start paying again when you’re out of the woods. It can be either before or after you’ve started repaying.
With regards to repayment holidays for student loans, students can now take up to two years holiday following their graduation - even if they're earning over the repayment threshold. But it's best not to swan off to Jamaica, grow some dreads and enjoy the fumes, shall we say, without contacting the SLC and asking about this option.
It’s a period when the bank will let you off of repayments while you’re having a hard time, so long as you start paying again when you’re out of the woods. It can be either before or after you’ve started repaying.
With regards to repayment holidays for student loans, students can now take up to two years holiday following their graduation - even if they're earning over the repayment threshold. But it's best not to swan off to Jamaica, grow some dreads and enjoy the fumes, shall we say, without contacting the SLC and asking about this option.
bank loans
The difference between a loan and an overdraft is that an overdraft is simply what’s not in your account, whereas a loan is an agreement to lend you a certain amount, for a certain period, on certain terms.
Most banks do offer loans to students, although some of them need to be paid back before graduation. That rules them out as a way of financing anything other than a particular expense that you know you’ll be able to repay.
Definitely not the right choice for students who foresee the financial swamp just getting deeper and swampier further down the line.
However, all loans are subject to various terms and conditions, so do some thorough investigation before applying.
Most banks do offer loans to students, although some of them need to be paid back before graduation. That rules them out as a way of financing anything other than a particular expense that you know you’ll be able to repay.
Definitely not the right choice for students who foresee the financial swamp just getting deeper and swampier further down the line.
However, all loans are subject to various terms and conditions, so do some thorough investigation before applying.
graduate packages
Postgrads have different needs from their banks. They’re often meeting the whole cost of their course themselves and their living expenses tend to be higher - but they also often stand to gain even more financially from their course than undergrad students.
Most banks have packages for postgrads, although not every student is able to get them. Just the same as for undergraduate accounts, a nice fat interest-free overdraft can’t hurt and you’re more likely to need an extra loan on top. The information in the table overleaf is subject to change and postgrads’ situations vary, so it’s worth popping in to your local branch to check what they can do for you specifically.
Most banks have packages for postgrads, although not every student is able to get them. Just the same as for undergraduate accounts, a nice fat interest-free overdraft can’t hurt and you’re more likely to need an extra loan on top. The information in the table overleaf is subject to change and postgrads’ situations vary, so it’s worth popping in to your local branch to check what they can do for you specifically.
STAYING FRIENDS WITH YOUR BANK
Staying on your bank’s good side is in your interests. Not only will they send you fewer stroppy letters (with the added insult of charging you for the dubious privilege), but you’ll also get more out of them.
One of the best ways to keep in with the guys in suits is to practise sensible banking. Safe sex is best until you’re in a long-term relationship. Sensible banking is the same – don’t try anything else till you’ve been sleeping with money for a while.
Here then see Push’s top tips for sensible banking below...
For instance, take advantage of being in credit. It won’t happen often or for long.
When you’re in credit – or should that be if – don’t keep all your student loan or other money in your student bank account. The rate of interest will probably pay out something like 10p a year for every hundred pounds.
Instead, transfer some of it into a separate savings account that you should keep on the side for any windfalls - such as money you earn over the summer, birthday card payouts, inheritances from your long lost Aunt Maud, whatever.
Try comparison sites like moneyfacts.co.uk and moneysupermarket.com or the Best Buy tables in many of the quality Saturday and Sunday newspapers, for a summary of who’s offering what.
Remember, when your account’s in credit, you want the highest interest rate possible. It’s the opposite of overdrafts and credit cards, where you want to go for the lowest rate of interest (or, even better, interest-free).
Your bank knows that your student bank account is there for your short-term cash needs. That’s why it has the overdraft facility. But just because the account might spend most of its time in the red, it doesn’t mean that when you’ve got money your bank will expect you to keep more in your current account than you have to.
In fact, Mr Bank Manager will probably be only too glad to open another account for you that pays interest, but that you won’t be able to overdraw.
That way, while you’ve got money, you won’t be losing out on the opportunity to make it earn you more money. But be careful not to get stung with charges just because your money was in the wrong account.
Check how long it takes to transfer money between your two accounts – it can often be done instantly if your accounts are held with the same bank, but will probably take up to three working days to wind it’s way to a different bank.
Most banks allow up to about £250 cash out per day (funds permitting, of course) – but your budget should see you taking out way less. Fifty quid a week is nearer the mark. On the other hand if you prefer paying for things with the genuine folding stuff and rarely use your debit card or cheques for purchases, then you may need a bit more.
Limit your cash withdrawals to one a week and don’t be tempted to draw out more than you need. That will stop you blowing your budget without noticing, because you’ll only ever be able to spend what you’ve got.
Unless you have some clever and commendable paper-saving, online set-up, you’ll get an official statement from the bank every month. Don’t throw it away – read it, check it and look for mistakes. Even banks make them sometimes.
Do point out the mistake, even if it’s a bank error in your favour. Unfortunately this game doesn’t work like Monopoly – when they realise, they’ll want the money back, which may be tough if you’ve already spent it. Strangely enough, however, the mistakes are more usually tilted the other way.
There may even be extra payments on your statement that you know nothing about. This may be a sign that someone’s using your details fraudulently – in which case you’ve got to let the bank know as soon as possible, if not sooner, or you could end up footing the bill. Have a look at identity-theft.org.uk for advice on how to cope with, and to protect yourself from, getting your good name swiped.
Alternatively, it may be a sign that you’re not keeping track of your spending – in which case you're probably burying your head in the proverbial while flashing the plastic way too much. Stop now.
Well the same mardy attitude towards your bank won't do you any favours.
It's hardly rocket science - or even the French subjunctive - but keep a record of all correspondence from your bank and reply promptly to the letters, even the nasty ones.
In fact, especially the nasty ones. Keep statements in a separate folder, as you may need proof of your poverty to claim emergency cash in times of need. And if you get online statements, rather than the tree-printed variety, make sure you take regular printouts.
Going over the limit is like being caught sleeping with someone else. Your bank may say they forgive you, but you’ll always have this uneasy feeling that they don’t really trust you (and you’re probably right).
If you are having real trouble coping with the limit at its current level, talk to your bank’s student advisor before it’s too late. They can usually work something out.
If you lose it or it gets stolen, report it immediately. Even if you think it’s probably hidden somewhere and you don’t want to have to wait for a new one to arrive by post, report it anyway. If it’s used fraudulently by someone else, if the loss hasn’t been reported you may find yourself at best doing some embarrassing explaining – and at worst, shelling out yourself.
Don’t write your PIN down. Keep it to yourself and be careful that nobody’s checking it out over your shoulder when you use the machine.
Although Push doesn't wish to tar all shopkeepers with the same suspicious brush, if your local cornershop asks if you need cashback, say no - unless you urgently need some readies and are positive there’re no working cash machines in a several-mile radius.
It’s all too easy to sink into a cashback-happy hole by saying yes each time you shop without ever having to look at your waning bank balance. But when you do check the figures, or the bailiffs come round, it’ll be a nasty shock.
And never, ever, put your card behind the bar for a tab. You’ll end up drinking more than you intended and every pisshead in the bar will be putting their drinks on your slate. You’ll wake up feeling sick, skint and sorry.
One of the best ways to keep in with the guys in suits is to practise sensible banking. Safe sex is best until you’re in a long-term relationship. Sensible banking is the same – don’t try anything else till you’ve been sleeping with money for a while.
Here then see Push’s top tips for sensible banking below...
- WHEN IN CREDIT
For instance, take advantage of being in credit. It won’t happen often or for long.
When you’re in credit – or should that be if – don’t keep all your student loan or other money in your student bank account. The rate of interest will probably pay out something like 10p a year for every hundred pounds.
Instead, transfer some of it into a separate savings account that you should keep on the side for any windfalls - such as money you earn over the summer, birthday card payouts, inheritances from your long lost Aunt Maud, whatever.
Try comparison sites like moneyfacts.co.uk and moneysupermarket.com or the Best Buy tables in many of the quality Saturday and Sunday newspapers, for a summary of who’s offering what.
Remember, when your account’s in credit, you want the highest interest rate possible. It’s the opposite of overdrafts and credit cards, where you want to go for the lowest rate of interest (or, even better, interest-free).
Your bank knows that your student bank account is there for your short-term cash needs. That’s why it has the overdraft facility. But just because the account might spend most of its time in the red, it doesn’t mean that when you’ve got money your bank will expect you to keep more in your current account than you have to.
In fact, Mr Bank Manager will probably be only too glad to open another account for you that pays interest, but that you won’t be able to overdraw.
That way, while you’ve got money, you won’t be losing out on the opportunity to make it earn you more money. But be careful not to get stung with charges just because your money was in the wrong account.
Check how long it takes to transfer money between your two accounts – it can often be done instantly if your accounts are held with the same bank, but will probably take up to three working days to wind it’s way to a different bank.
- CASH MACHINES JUST GIVE CASH, THEY DON'T PRINT IT
Most banks allow up to about £250 cash out per day (funds permitting, of course) – but your budget should see you taking out way less. Fifty quid a week is nearer the mark. On the other hand if you prefer paying for things with the genuine folding stuff and rarely use your debit card or cheques for purchases, then you may need a bit more.
Limit your cash withdrawals to one a week and don’t be tempted to draw out more than you need. That will stop you blowing your budget without noticing, because you’ll only ever be able to spend what you’ve got.
- KEEP YOUR BALANCE
Unless you have some clever and commendable paper-saving, online set-up, you’ll get an official statement from the bank every month. Don’t throw it away – read it, check it and look for mistakes. Even banks make them sometimes.
Do point out the mistake, even if it’s a bank error in your favour. Unfortunately this game doesn’t work like Monopoly – when they realise, they’ll want the money back, which may be tough if you’ve already spent it. Strangely enough, however, the mistakes are more usually tilted the other way.
There may even be extra payments on your statement that you know nothing about. This may be a sign that someone’s using your details fraudulently – in which case you’ve got to let the bank know as soon as possible, if not sooner, or you could end up footing the bill. Have a look at identity-theft.org.uk for advice on how to cope with, and to protect yourself from, getting your good name swiped.
Alternatively, it may be a sign that you’re not keeping track of your spending – in which case you're probably burying your head in the proverbial while flashing the plastic way too much. Stop now.
- PEN PALS
Well the same mardy attitude towards your bank won't do you any favours.
It's hardly rocket science - or even the French subjunctive - but keep a record of all correspondence from your bank and reply promptly to the letters, even the nasty ones.
In fact, especially the nasty ones. Keep statements in a separate folder, as you may need proof of your poverty to claim emergency cash in times of need. And if you get online statements, rather than the tree-printed variety, make sure you take regular printouts.
- KNOW YOUR LIMITS
Going over the limit is like being caught sleeping with someone else. Your bank may say they forgive you, but you’ll always have this uneasy feeling that they don’t really trust you (and you’re probably right).
If you are having real trouble coping with the limit at its current level, talk to your bank’s student advisor before it’s too late. They can usually work something out.
- PROTECT YOUR PLASTIC
If you lose it or it gets stolen, report it immediately. Even if you think it’s probably hidden somewhere and you don’t want to have to wait for a new one to arrive by post, report it anyway. If it’s used fraudulently by someone else, if the loss hasn’t been reported you may find yourself at best doing some embarrassing explaining – and at worst, shelling out yourself.
Don’t write your PIN down. Keep it to yourself and be careful that nobody’s checking it out over your shoulder when you use the machine.
Although Push doesn't wish to tar all shopkeepers with the same suspicious brush, if your local cornershop asks if you need cashback, say no - unless you urgently need some readies and are positive there’re no working cash machines in a several-mile radius.
It’s all too easy to sink into a cashback-happy hole by saying yes each time you shop without ever having to look at your waning bank balance. But when you do check the figures, or the bailiffs come round, it’ll be a nasty shock.
And never, ever, put your card behind the bar for a tab. You’ll end up drinking more than you intended and every pisshead in the bar will be putting their drinks on your slate. You’ll wake up feeling sick, skint and sorry.