Basic student banking
As a student, a great way to control your finances is to get as much advice and support as possible. Of course, that means talking money and bank accounts, but it also means looking at your lifestyle, too.
There are so many different bank accounts and financial products available, it can be difficult to know the best one to pick when you're a student. Here are some things you should look out for:
With the advent of government-sponsored debt in the form of student loans, it is now common for most students to have some debt. But the real danger of this is that students might begin to view all debts as the same, when in fact they aren't. That's why it's important to understand what's meant by the terms 'good debt' and 'bad debt'.
A good debt might include something like a student loan because the interest so low. Obviously, no one wants to be in debt, but with loans such as these, remember that you are investing in your future.
Bad debt is the kind you get with high interest loans or store cards where the interest could be anywhere from around 5% up to 30% a year. Don’t forget, if you have a credit card and you pay your balance off before the required date, you won’t be charged interest. Most credit cards offer up to 56 days interest-free, so check with your provider to find out how many days they offer.
Student loans are among the cheapest form of long-term borrowing available. There are two different types of student loan. One covers tuition fees and is paid directly to your university; the other is for help towards day-to-day living costs such as rent and travel costs. All eligible students can get the full student loan for tuition fees, and may also be able to apply for a maintenance loan or maintenance loan grant for living costs.
Remember that you won't have to start repaying student loans until you've left university and are earning more than £21,000 before deductions.
These are designed to ease you into your working life by still giving you student conditions, such as an interest-free overdraft, but phasing it down each year as you begin to earn more, helping you pay it off gradually.
When trying to choose a graduate account, an important factor to consider is the length of time you'll be able to use the interest-free overdraft. And, make sure you think carefully before opting for a fee-paying graduate account that claims to give you ‘better’ interest-free overdraft deals.
It may work out more expensive to pay a monthly fee, usually around £5-£10, than the no-fee accounts with the best 0% overdraft conditions. The exception is if you think you’ll use the additional benefits and that they are worth the extra cost.
If your account has an overdraft facility on it, then you can agree an overdraft limit in advance with your bank. This authorised limit or agreed overdraft is the maximum amount you can take out, over and above what's already in your account.
As with an unauthorised overdraft, if you exceed your authorised limit, you may be charged a fee. Likewise, while your account is overdrawn, you'll usually be charged a set amount of interest on the amount you have borrowed until you pay it back. However, an agreed overdraft may give you some financial flexibility, so it's useful to have. Just make sure you stay within your agreed limit. Plus, with the mobile banking services offered by most banks today, you can set yourself upper and lower limits on your current account. When you reach these, you’ll be notified with a text alert, which could help you stay within your agreed overdraft limit.
Banks offer a wide variety of ways to check your balance, which can really help you stay on top of your finances, particularly when you are on the go. It’s worth checking if your bank offers ways for you to manage your money such as online, telephone and mobile banking.
Plus, you can check your balance at a Cashpoint ® machine, at the local branch of your bank or even the Post Office ®.
Lloyds TSB Bank plc and Lloyds TSB Scotland plc are authorised and regulated by the Financial Services Authority except for lending where we are licensed by The Office of Fair Trading. FSA authorisation can be checked on the FSA’s Register at: www.fsa.gov.uk/register. Lloyds TSB Bank plc and Lloyds TSB Scotland plc are members of the Financial Services Compensation Scheme and the Financial Ombudsman Service. We subscribe to the Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk.
Lloyds TSB Bank plc Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds TSB Scotland plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237.