Beware incentives of student bank accounts

25 July 2008 / by Rebecca Sargent
With A-level results just around the corner, students should be starting to get their finances together in preparation for the future, according to Moneyfacts.co.uk.

As students progress past A-levels, student money matters become more important and funds become more readily available to students.

Analyst at Moneyfacts.co.uk, Michelle Slade said: "Even before the ink has dried on you’re a-level certificates, students can expect to be targeted by the big banks to sign up for one of their student accounts - no wonder really, given the earning potential that the average graduate can have."

Choosing student bank accounts can be a confusing time says Moneyfacts.co.uk, and students should be aware that they are not all the same. One tactic banks use to entice students are incentives such as gadgets or a rail card, but Michelle Slade warns, "As a rule of thumb, don't be fooled by incentives."

"Discount offers or incentives such as cinema tickets will last only five minutes or will only benefit you if you buy another one of the bank's products," she added.

An overdraft facility will be important to most students, stresses Moneyfacts.co.uk, as the majority will be relying on an interest free deal that could be anything up to the £3,000 available from Halifax.

As most students who have just finished their A-levels will have the summer off before starting university or heading off on gap year adventures, Moneyfacts.co.uk, advises saving during the summer, stating: "If you get the opportunity to work this summer, try to put aside a little of your earnings for the future. Having even a small amount of savings will leave you in good stead for the start of university life, especially as you won't normally receive your first student loan payment until your first day at university."

Moneyfacts.co.uk also warns students against putting themselves at unnecessary risk from identity fraud by failing to dispose of important information safely. Its research found that 70 per cent of students insufficiently destroy their card receipts and bank statements, leaving themselves open to identity theft.

Ms Slade advised all students to keep a close eye on their finances in order to avoid nasty surprises at the cash point: "Make sure you keep a regular eye on your finances, as it's only too easy to lose track of your spending. The easiest way is to set up online banking."

For those who do struggle, she reminded students that it is not uncommon to face financial difficulties and advised speaking to the bank and university, warning that: "If you let things get out of control, you must remember that financial mistakes at university are not wiped clean, and they can come back to haunt you later in life."

© Fair Investment Company Ltd