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5 Aug 2020

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Student banking – what’s on offer for 2006/07 and what should students watch out for!

Students will soon be getting their exam grades, seeking places at university and will then be on the search for their new student bank account. Michelle Slade, personal finance analyst from moneyfacts.co.uk takes a look at the 2006/07 student packages on offer and explains the key features students should be looking out for.

“Only three providers now offer account opening incentives, HSBC, Lloyds TSB and NatWest, with many other offering ongoing benefits in the form of commission free travellers cheques and a variety of discounted shopping deals. The Incentives on offer seem to have moved away from student ‘useful’ offers such as rail cards (still available at NatWest) to more ‘fashionable gadgets’ such as web cams and iPods.

“But however tempting these ‘goodies’ may be, it is important that students look at account features such as interest-free overdrafts and unauthorised overdraft rates to choose the account that offers best value for their particular circumstances. The potential savings on these could mean that you could possibly buy one of the advertised ‘freebies’ and still have cash to spare.

Interest Free limit

“Usually students are offered an interest free limit, which range from £1,000 to up to £2,500 from the main high street lenders. In some instances these will increase over the term of study for up to five years.

“While the higher limits may look attractive, it must be noted that some are not guaranteed, and once the application is processed the student may be offered a much lower figure.

Authorised Overdraft

“Often students are able to agree extension to their original limit in times of need, usually for a limited period of time. But what they must realise that, with the exceptions of NatWest and Royal Bank of Scotland, they will be charged interest on this borrowing, which can range from 7.2% to 9.9%.

Unauthorised Overdraft

“For many students this is the first time they have truly had to manage their money, and often within very tight margins. It is inevitable that, on occasions they may slip over an agreed limit, which can prove to be a very costly oversight.

“HSBC account holders seem to get the fairest deal in this instance, not applying unauthorised fees and charging their standard rate of interest (15.9%), compared with fees of £30 per day (max £90 pm) with Lloyds TSB, or interest of a whopping 32.92% at the Co-operative Bank.

Credit Interest

“Some accounts are paying interest of over 3% on credit balances, but with the majority of students unlikely to find themselves with a large credit balance, it does raise the question whether this really is much of a benefit for the student population. For example, a student lucky enough to maintain an average credit balance of £500 for a year will earn a measly £15 at 3%.

“When looking for their student bank account provider, they should also evaluate the services available. Most student accounts providers support a specialist advice service, with dedicated advisers trained in managing student and graduate finances, so it may be worth considering a bank with a branch local to their university.

“Most importantly students should choose an account which suits their longer term financial needs and should not choose an account purely based on the incentives dangled in front of them at the outset. “

Full information on student and graduate bank accounts can also be found in the banking best buys section on Moneyfacts.co.uk.  

Company

Credit Interest

Max Free o/d per year

Auth Fees & interest

Unauth Fees & interest

Abbey
 

Incentive: Specialist Advice Service and £20 cash for existing Abbey A/c holders aged 16 - 18

1.49%

 

Year 1  £1000
Year 2  £1250
Year 3  £1500
Year 4+  £1800

Nil
£1 - 9.9% APR (0.79% pm)

£20
£1 - 28.7% APR (2.12% pm)

Barclays Bank

Incentive: Discounts on shopping and leisure on website www.Barclaysandme.com

0.10%

Year 1  up to £1000
Year 2  up to £1250
Year 3  up to £1500
Year 4  up to £1750
Year 5  up to £2000

Nil
£1 to £3K - 8.9% EAR (0.72% pm)

Nil
£1 - 27.5% EAR (2.05% pm)

Co-operative Bank

-

Year 1  £1400
Year 2  £1700
Year 3  £2000

Nil
£1 - 9.79% EAR (0.78% pm)

Nil
£1 - 32.92% EAR (2.40% pm)

HSBC

Incentive: A 512mb MP4 player or 10 CDs albums from CD Wow!. Available to first year students about to start their first undergraduate course. Free driving lesson and £15 off your next 5 lessons booked with BSM.

0.10%

Year 1  up to £1000
Year 2  up to £1250
Year 3  up to £1500
Year 4  up to £1750
Year 5+  up to £2000

Nil
£1 – 8.0% EAR

Nil
£1 - 15.9% EAR (1.24% pm)

Halifax
 
Incentive: Discounts on Halifax World Explorer Travel insurance and Cardcare cover, commission-free travellers cheques and currency, discount on AA breakdown cover

2.00%

Year 1  up to £1750
Year 2  up to £1900
Year 3  up to £2100
Year 4  up to £2100
Year 5  up to £2100

Nil
£1 - 7.2% EAR (0.58% pm)

£28 pm
£1 - 24.2% EAR (1.82% pm)

Lloyds TSB

Incentive: Free iPod shuffle for students entering higher education for the 1st time in academic year 2006/07. £500 must be credited to the account by 31.10.06.

0.10%

Year 1  £1500
Year 2  £1500
Year 3  £1500
Year 4  £2000
Year 5  £2000

Nil
£1 - 7.4% EAR (0.60% pm)

£30 per day (max £90pm)
£1 - 29.8% EAR (2.20% pm)

NatWest
 
Incentive: 5 Year Young Persons Rail Card (worth £100) & apply online before 1.8 receive a free Windows Live Messenger webcam and headset

0.10%

 

Year 1  up to £1250
Year 2  up to £1400
Year 3  up to £1600
Year 4  up to £1800
Year 5  up to £2000

Nil
£1 - 0.0% EAR

Nil
£1 - 17.81% EAR (1.38% pm)

Royal Bank of Scotland
 
Incentive: Discounts on shopping, entertainment and selected holidays. Commission free travellers cheques and currency.

2.00%

Year 1  up to £2500
Year 2  up to £2500
Year 3  up to £2500
Year 4  up to £2500
Year 5  up to £2500

Nil
£1 - 0.0% EAR

£10
£1 – 29.84 EAR
(2.20% pm)

Smile
 

3.00%

Year 1  £1000
Year 2  £1400
Year 3  £1800
Year 4  £2000

Nil
£1 to £2K - Negotiable

£5 pm
£1 - 25.0% EAR (1.8775% pm)

http://www.moneyfacts.co.uk/banking/default.aspx 

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry. 

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