Financial traps to avoid while at university

Short-term loans

As general rule of thumb, the more desperate you are to borrow money, the more it will cost you.

That's why, although short-term loans might solve an immediate cashflow problem (for example if you are struggling to afford your weekly supermarket shop at university) you should check the small print with a fine-tooth comb. 

For example, online lender Wonga quotes a typical APR of 26.89%.

To avoid extortionate rates of interest like this, set a weekly budget at the start of the university year and stick to it.

If things get difficult, always seek out interest-free short-term borrowing first; your parents are the best first port of call if they can afford to help and you stick to the agreed repayment plan.

Bank freebies

When you arrive at university, banks trip over themselves to net your custom. This is because, while you may not have much money now, they know that in a few years' time you are likely to have a decent salary under your belt and will be a valuable (and hopefully, loyal) customer. 

To entice you through the doors, banks will offer freebies such as MP3 players, discount railcards and even straightforward cash.

But while these perks are not bad in themselves it's important to look beyond them to the account facilities such as interest and charges on overdrafts. After all, these are likely to be relevant for years whereas your upfront 'freebie' will soon be forgotten.

Credit deals

Interest-free credit cards offered to students are only useful if you are sure you can clear the balance before incurring any interest - for example, if you know you are in line for a cash injection from your parents.

However, if this isn't the case, as a student, it's fairly unlikely that you will ever find yourself with 'spare cash' you can use to clear your credit card balance. More likely is that you will have other debts mounting up instead and will be playing a constant game of catch-up.

In this case, regardless of the initial offer, credit cards at university are usually best avoided altogether. 

ATM charges

The vast majority of ATMs can be used for free regardless of which bank or building society it belongs to. But don't come unstuck as some cash machines will charge £1.50 or more to make any withdrawals of any amount.

While these are usually standalone machines found in newsagents or petrol stations, others can look like harmless 'holes in the wall'. Think ahead and get organised with your cash withdrawals, to ensure every machine you use won't charge you just to access your own cash.

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