Halifax doubles guaranteed student overdrafts
Halifax has doubled its guaranteed student overdraft to £1,000 for those starting university this year.
Those opening a Halifax Student Account will also be able to extend their overdrafts to a maximum of £3,000 at any point, subject to credit approval.
"We all know that going to university can be an expensive time, but the first term can be the most expensive of all. Within those first few weeks students often have to shell out for accommodation and tuition for the year, new books for their course, laptops, membership fees for clubs and societies on top of everything else," says Anthony Warrington, director of accounts at Halifax.
"That's why we've doubled the guaranteed interest-free overdraft level for all successful applicants. Now that stands at £1,000, they've got the help from us when they need it, and don't have to worry about any fees they might rack up by slipping into an unplanned overdraft."
The account also offers an interest-free overdraft available for up to five years, depending on course length, and for a year after graduation; a Visa debit card; phone, online and in-branch access as well as commission-free travel money.
So how can you find the best student account for you?
It is easy to be persuaded by the freebies banks use to entice new students to open their accounts, but it is best to shop around and make sure you really know what you are signing up for.
Make sure you get an interest-free overdraft, and you don't go beyond it as the interest banks charge you if you do can be as high as 24%.
Although it seems a long way off, it's also important to check how soon after graduation you will have to start paying interest on your overdraft. Most banks give you a year to pay it off but it's important to check.
Find out which banks have branches on campus – this can be a life-saver if you lose your card or need some advice. You might also want to consider banks with mobile banking apps for your phone.
Take a look at the added extras, for example, a student rail card is likely to be more useful than a personalised debit card, and some banks even offer cash for signing up.
Here are Moneywise's favourite student accounts:
- NatWest: It extends its overdraft limits throughout your course to help you budget and the account comes with a 16-25 rail card
- HSBC: Up to £3,000 interest-free overdraft and free two-year worldwide travel insurance
- Halifax: Up to £3,000 interest-free overdraft and commission-free foreign currency
- Santander: Up to £2,000 interest-free overdraft and £50 cash for joining.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.