City University s Guide to Student Bank Accounts. Manage your Mon y

Transcription

1 City University s Guide to Student Bank Accounts Manage your Mon y

2 City University s Guide to Student Bank Accounts 1 Table of Contents Student Bank Accounts...2 Barclays Student Account...4 Barclays International Student Account...5 Halifax Student Account...7 Halifax International Student Account...8 HSBC Student Account...9 HSBC International Student Account...10 NatWest Student Account...11 NatWest International Student Account Santander Student Account...13 Santander International Student Account...13 A Comparative Look...15 General Advice...17 Final Comments...18 Glossary of Technical Terms...19

3 City University s Guide to Student Bank Accounts 2 Student Bank Accounts There are many issues that you will need to think about whilst studying at university. Having sufficient money for each term and ultimately your course will be a top priority for every student. That is why it is worth spending some time searching for different types of student bank accounts that are available to you. The main difference between a standard current account and a student bank account is the interest free overdraft facility that is available. A customer can have a number of current accounts with many banks but a full time student can only have one student account. Therefore make sure that you make the right decision when deciding which bank to open your account with. Banks usually offer a different account for international students. If you are an international student it is very important that you consider a number of key issues regarding opening a bank account here in the UK. Make sure that you are fully aware of how long it takes to open an account and receive a bank card. Some international students underestimate the time that it takes to do this and do not arrive with enough money to cover their costs until their account becomes fully active. You may wish to receive bank statements regularly if you are applying to extend your visa and you need to show proof that you have sufficient funds to cover your costs whilst studying Also check how easy it is to receive money from an international account as well as how long it will take until the money is transferred to your account from an overseas account.

4 City University s Guide to Student Bank Accounts 3 To open a student bank account you will need to provide official documentation to the bank confirming the following: Your Name You are currently a student or will be a student in the next academic year Your UK address Your overseas address if you are an international student Bank Letters for students which prove all of the above are available from your department and the Student Centre which is located on level 2 in Northampton Square. In order to help you make an informed decision on which student account is best for you, here are a few to choose from:

5 City University s Guide to Student Bank Accounts 4 Barclays Student Account Barclays Bank has been around for years. It offers a student bank account with no freebies. It offers a good interest free overdraft and access to all their branches if required. With Barclays Mobile Banking, it has never been easier to check your account activity on a regular basis. Features: 200 interest-free overdraft when you open your account; You can apply to increase your interest-free limit to 2,000; You can extend your overdraft up to 3,000 at the preferential rate of 8.9% EAR typical variable if your interest-free overdraft's been used up; Access to a Personal Reserve that gives you an extra agreed amount for life's little emergencies; Debit cards - subject to status; You can register for Online and Telephone Banking; Mobile Banking - view balances and transactions. You can also top up your mobile at Barclay s ATMs;

6 City University s Guide to Student Bank Accounts 5 You can get Text Alerts about your account to your mobile; There is a Barclay s branch within 1.5 miles of 94% of the UK's top universities (there is one just outside the main entrance to the Northampton Square campus); You can use your debit card abroad. Comments The available interest-free overdraft limit depends on year of study and is subject to status and application. Please remember that all overdraft facilities are repayable on demand. An increase in the interest free limit is subject to individual circumstances. A flat fee of 2 per month applies for that optional service of receiving text alerts on your mobile. Barclays International Student Account The International Student Account allows you to carry out your day-to-day banking with the greatest of ease. For day-to-day access to your money, Barclays provides you with a Barclays Connect card, a debit card and cheque guarantee card enabling you to pay for goods in shops and withdraw money at cash machines. You can access your funds through any of the 1,600 Barclays branches in the UK. Most importantly, you have control and access to your accounts anywhere in the world through Barclays s International Online and Telephone Banking service.

7 City University s Guide to Student Bank Accounts 6 Features: Fee-free banking in the UK; Up to 25% discount on Hewlett Packard laptops, desktops and accessories ; A Barclays Wealth current account with a Sterling Connect card (VISA debit card) for day-to-day banking; Cheque book; Commission-free currency exchange and travellers cheques from your local Barclays branch; Country Guides; International Telephone and Online Banking; Free internal transfers between Barclays accounts.

8 City University s Guide to Student Bank Accounts 7 Halifax Student Account Halifax Bank has a student bank account that should meet the needs of most students in their first year with the highest free overdrafts offered by any UK bank of up to 3,000. This account won the best student banking provider award from Your Money in 2008 and seems like a good long term deal if you are not interested in freebies offered by other banks. Features: Interest free overdraft of up to 3,000; No credit card; 25% discount with the AA; 20% discount on card care protection; Commission free foreign currency (check the rates before you buy); Includes Halifax Visa debit card; Easy access through Halifax s branches and cash machine network and unlimited online and telephone banking - for 24-hour access to your bank account.

9 City University s Guide to Student Bank Accounts 8 Comments An interest free overdraft of up to 3000 is available up to 5 years if you continue to be a student. You will also receive an extra year after you graduate. You will automatically receive a 500 interest-free overdraft when you open your account and then you can apply for more if and when you need it. The amount of overdraft you receive depends on your personal circumstances and whether you make regular payments into the account. You must understand that you may not receive the full 3,000 overdraft. Halifax International Student Account International Students are advised to apply for a Halifax Student Account, as there are no particular accounts geared towards International Students in general.

10 City University s Guide to Student Bank Accounts 9 HSBC Student Account The HSBC Student Banking service is all about helping you in your student life. You will get a flexible bank account that gives you the support you need to enjoy your time as a student with access to your money whenever you need it, 24/7. Features: Interest free overdraft of up to 2,000; 2% AER on credit balances in your first year; Two years global travel insurance (great if your gap year is in year 2); Free 5 SIM card; Discounts on Lonely Planet guides, Dell computers and CDWOW; Mobile banking facility; 0% AER credit interest on money in your account; Easy access through HSBC s branches and cash machine network and unlimited online and telephone banking - for 24-hour access to your bank account

11 City University s Guide to Student Bank Accounts 10 Comments There are no overdraft fees and overdraft limit alerts at HSBC cash machines so you may not know that you have gone into overdraft whilst withdrawing money. The 2% AER on credit balances only applies for the first 1000 that you deposit in your first year of study. HSBC International Student Account For 8 a month, HSBC will give you a Visa Debit card, cash withdrawals from 59,000 UK Link ATMs and 24/7 account access, without the need for a permanent UK address. HSBC Passport has an initial fixed term of 12 months and is renewable monthly afterwards. It also provides essential facilities like a 24-hour advice line, easy money transfer, preloaded international SIM card and relocation support in eight languages. You can apply for HSBC Passport online before you leave home. HSBC Passport Bank Account benefits: Features: A fully functional debit card allowing you to pay for goods and services on the high street, over the phone and online; Use any of 59,000 LINK ATMs in the UK and cash machines worldwide, wherever you see the logo shown on your card; Access your account 24 hours a day via Telephone and Internet Banking (subject to planned maintenance); Keep track of your money online and with quarterly paper statements; A separate flexible savings account with instant access to your money; A preferential rate of 8% AER/gross fixed for 12 months on our Regular Saver;

12 City University s Guide to Student Bank Accounts 11 Online relocation support in eight languages: Romanian, Polish, Spanish, French, Czech, Slovak, Mandarin and English; 24-hour telephone relocation advice line with red24; Help with your HSBC Passport online application. NatWest Student Account NatWest Bank has the most first year students opting for their student bank accounts than any other bank even though their account benefits are not as good as other student banks. Perhaps it's because they have an excellent student branch network and a very good customer service. Remember to make sure to check out NatWest s overdraft deal because other banks may offer higher free overdraft limits. Features: Interest free overdraft of up to 1,000 in your first year; Can increase this to 2,000 in your 5th year; 0.10% AER on credit balances in your account; A student credit card with a 500 balance (rate of 18.9% AER); Fee free day to day banking; Loads of freebies to entice you to bank with them; Includes online bank statements; Register to get text alerts sent straight to your phone, when your account hits upper and lower limits set by you; Easy access through NatWest s branches and cash machine network; Unlimited online and telephone banking - for 24-hour access to your bank account.

13 City University s Guide to Student Bank Accounts 12 Comments You can apply for an interest-free overdraft. This can be up to 1,000 in your first year of study. However, NatWest normally offer an overdraft limit of 500 in your first term, 750 in your second term and 1,000 in your third term. You can then apply for up to 1,250 in your second year, 1,500 in your third, 1,750 in your fourth and 2,000 in your fifth. To maintain your overdraft, you need to be using NatWest Student Current Account as your main account. Some of the freebies may include a Student Rail Discount Card, a Student Discount Card for savings on big brands as well as receiving a 100 discount on purchase of ASUS laptops NatWest International Student Account The NatWest Advantage Blue International - student option helps you make the most of your money while you re studying in the UK. There is a monthly fee of 6.95 for this account. Features: Mobile Phone Insurance that offers worldwide cover for your phone or PDA, including protection against unauthorised calls Gadget Cover to protect your personal portable items such at MP3 players and cameras Cheap calls home with an Orange SIM card with international calls from 5p per minute Train tickets for less with a Railcard that saves you 1/3 on most rail fares throughout Great Britain Multilingual Concierge Service that provides you with a handy helpline giving you access to a range of services in a variety of languages An International Student Identity card (ISIC) giving you over 40,000 online and lifestyle discounts here and abroad

14 City University s Guide to Student Bank Accounts 13 Santander Student Account The Santander Student Account comes with mobile, gadget and laptop insurance, worth over 320 each year. It also gives you financial support with 0% EAR (typical) overdraft of up to 2,000 ( 1,000 in first year) plus they pay you interest on balances up to 500. Features: Interest-free overdraft starting at 1000 and then increasing up to a maximum of 2000 (depending on your year of study and providing a minimum of 500 has been credited to the account).if you have less than 500 in your account, you ll only be entitled to a 250 overdraft facility. Cash gift - credited to the account after it has been opened for one month Essentials - includes a Visa debit for easy, secure withdrawals and purchases Earn - while you learn with 2.00% AER/1.98% gross (variable) (5.00% AER/4.89% gross (variable) for Santander University Account) interest on the money in your account on balances up to 500. Easy access - through Santander s 700+ branches and cash machine network. Online banking - for 24-hour access to your bank account Santander International Student Account The International Student Account gives you a Visa Debit card, one free deposit of a foreign cheque per month and 3.00% AER/2.96% gross (variable) interest on in-credit balances up to 500. There is a monthly fee of 5 for this account.

15 City University s Guide to Student Bank Accounts 14 Features: Essentials includes a Visa Debit card for easy secure withdrawals and purchases Earn while your learn with 3.00 AER/2.96% gross (variable) on balances up to 500 Access your money 24/7 Manage your account online, by phone or in branch Santander will not pay interest on any amount over 500, or on your whole balance if you do not pay at least 50 into your account each month.

16 City University s Guide to Student Bank Accounts 15 A Comparative Look Table 1: Student bank account comparisons Initial interest free overdraft Maximum interest free overdraft Credit interest Available Special Feature Best Freebie Barclays Halifax HSBC NatWest Santander N/A N/A 250 2,000 3,000 2,000 2,000 2,000 0% 0% 2% 0.10% 2% Personal Reserve None Commission Free Foreign Currency 25% Discount with AA None Global Travel Insurance Receive Text Alerts Rail Discount Card Receive Cash Gift After 1 Month None It s important that you have a good look at the different types of student bank accounts that are available to you. Remember that the maximum interest free overdraft is what you could receive subject to terms and conditions. You may not be entitled to this amount if you have a poor credit rating. Other factors that could determine whether you are entitled to this amount is how much money you have deposited in your student account to date and whether you use or will be using this student account as your main account. Some banks offer an immediate interest free over draft facility which means that you can take money out straight away without spending time trying to arrange an overdraft. This can be particularly helpful if you are an international student and you find that your money is running out quicker than you originally thought.

17 City University s Guide to Student Bank Accounts 20 If you think that you will not need to use the interest free overdraft facility you might want to maximise the credit that you receive from your student account. When comparing credit interest percentages make sure that you read the small print and how it affects the amount that you are actually credited with. For example, Santander s credit interest of 2% (or 5% if you have a Santander University Account) only applies for the first 500 deposited in your account. NatWest however, has a significantly lower credit interest percentage of 0.10%. The point to compare here is that NatWest offers this rate to any amount of money in your account be it 1 or 10,000.Therefore, you may receive a higher credit interest amount from NatWest compared to Santander if you have a relatively large amount in your student account. Financing your studies can be difficult especially if you experience a delay in receiving the necessary financial support that you may be entitled to. If you feel that you may need to borrow a large amount from the bank, it s advisable choose the bank which offers the highest interest free credit. Exceeding your overdraft facility without first agreeing to do so may result in a very high interest rate penalty charge being levied on your student account. Banks tend to hide the percentage penalty charge placed on an unapproved interest overdraft. It is strongly advised that you know this value before you decide to open an account with the desired bank.

18 City University s Guide to Student Bank Accounts 20 General Advice Try to look beyond the freebies and look at what the student account itself has to offer. Remember the main purpose of a student bank account is to offer you as much interest free overdraft as possible. Halifax has the greatest interest free overdraft at 3000 but always remember that you may not be entitled to this amount. The limit of interest free overdraft for any bank is always determined on a case by case basis depending upon your circumstances. If you have concerns about being able to access large amounts of credit you may want to opt for the NatWest Student Bank Account. Not only does the account steadily increase the interest free overdraft availability, it also limits the amount of overdraft that you can use in each term during your first year of study which can be an invaluable tool for budgeting purposes. If you think that you probably won t need to use an overdraft facility its worth thinking about the credit interest rate in your account. Usually banks offer no interest on credit student account balances but there are some that do. Be careful to read the terms of receiving interest as some banks limit their interest credit up to a certain amount in your account whilst others only offer you interest during your first year of study. Another factor to consider is the access to your account information. The more informed you are about your account activity the better you can plan to overcome any future financial difficulty by agreeing to extend your overdraft limit beforehand. Some banks offer information about account activity on your mobile whilst others will have strong online and telephone banking facilities. Make sure you know exactly how much you will be charged if you agree to extend your authorised overdraft facility with the bank.it is also important to know the percentage charge you will receive if you exceed your interest free overdraft without notifying your bank first. Most student accounts will automatically change to a current or graduate account upon completion of your studies. It is worthwhile knowing what this means for you and how it will affect your interest free overdraft facility.

19 City University s Guide to Student Bank Accounts 20 Final Comments Details of these five student bank accounts are correct as at July 2010.It is strongly advised that you visit each bank s website to find out more information regarding what features it exactly has to offer for its student bank account. Make sure you read any small print as well as terms and conditions that apply. Some banks, for example, insist that you must be aged 18 to open a student bank account with them whilst others need proof that you will be going to university regardless of your age. The following table relates to how easily accessible each bank branch is from the main university campus. Table 2: Banks accessibility from Northampton square and contact details Barclays Halifax HSBC NatWest Santander Address of Nearest Branch to Northampton Square City Road, EC1V 2NL 1 Liverpool Road, N1 0RP 74 Goswell Road, The City, EC1V 7DA 2-3 Upper Street,Islingt on,n1 OPH 74 Goswell Road, The City, EC1V 7DA Telephone Website Address arclays.co.u k uk om nder.co.uk Distance From Northampton Square Number of UK branches 0.43 miles 0.44 miles 0.4 miles 0.1 miles 0.4 miles Subsidiary RBS branches

20 City University s Guide to Student Bank Accounts 20 Glossary of Technical Terms Annual Percentage Rate (APR) The overall cost of borrowing if you owe money on your credit card, loan or overdraft. Annual Equivalent Rate (AER). A notional rate used for interest bearing accounts which illustrates what the gross credit interest rate (excluding any bonus interest payable) would be if paid and compounded on an annual basis. It helps you to compare the effective rates of credit interest on different accounts. Credit Check A search of your borrowing record, also known as your credit history. A bank or other organisation carries out a credit check on you when deciding whether to lend you money. Direct Debit An instruction you give to your bank or building society to make regular payments to someone from your account. Unlike a standing order, you agree that the creditor can vary this amount each month. Effective Annual Rate of Interest (EAR). The real annual cost of an overdraft, stated as an annual rate, which takes into account how often interest is charged to the account. All other charges, such as arrangement fees, must be shown separately from the EAR. Gross Rate. The interest rate you are paid before the deduction of income tax. Interest Rate

21 City University s Guide to Student Bank Accounts 20 The figure that sets how much interest you pay on a loan, or how much you receive if you put money into a savings account. The rate is usually linked to the Bank of England base rate and can move up or down. Net Rate. The interest rate you are paid after the deduction of income tax. Nominal Rate. The rate charged excluding compounding of interest and other charges associated with a borrowing, e.g. arrangement and security fees. Standing order An instruction you give to your bank or building society to make regular payments to someone from your account, for example to pay bills. Unlike a direct debit, the creditor cannot vary this amount only you can. Variable Interest Rate An interest rate on a loan or savings account that can change according to circumstances. For example, if the Bank of England base rate changes, the loan interest rate will probably change.