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Four finance tips to take with you to university

So, you’ve got your A-Level results and gained a place on the course of your choice. Once the partying is done, your thoughts will inevitably turn to the practicalities. And this will include money.

From choosing the right bank account and managing a budget for the first time to finding ways to keep costs low – there’s already plenty to get your head around before you so much as step foot in the first lecture.

We all know, university is not cheap. In 2019/20, the average combined tuition fee and maintenance loan was £15,400, according to figures from the House of Commons Library, obtained by Hargreaves Lansdown. The average will hit £16,7000 in 2026/27 the data suggests.

It means the average debt for students starting last year is expected to be £45,800, and only one in five are expected to pay it all back.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown: “In an ideal world, parents can drip feed vital lessons about budgeting, planning, borrowing and saving to their children over the years. However, you can’t always do everything, and you still have weeks to get the basics sorted.”

So, here are a few ‘basics’ to help get you on your financial feet when you leave home and start university.

1. How to find the best student bank account

First things first, you’ll want to open a student bank account. One tip we repeat weekly here at The Money Pages is – shop around. In other words, don’t just settle for the student account with your current bank, you aren’t tied to them. Go and do a bit of research to see if any other banks can offer you some more.

According to financial experts at Moneyfacts.co.uk, the most useful ‘benefit’ of a student account is the interest-free overdraft. So, this is where you should focus your attentions when searching.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “The most generous allowance of up to £3,000 is currently available from Nationwide Building Society and HSBC.

“Students can also get a £100 free cash inventive from HSBC this year, more than last year’s offer of £80.”

Barclays has reduced its overdraft from £3,000 last year to £1,500 – however, it has also renewed its online library for free making an annual saving of £96.

Meanwhile, Santander has renewed its Railcard offer which it claims can save students an average of £636 over the course of four years.

Check them all out and work out which offers you the best value based on your circumstances. If you are a regular train user, the Santander account could be incredibly useful but for drivers, it’s worthless.

Rachel said: “Finding the right student account is crucial, which is why students must compare the whole package of any account to ensure it suits their needs.

She added: “Those struggling would be wise to speak to their family and friends for advice and remember that any overdraft they borrow will need to be paid back.”

Scroll to the end of this article to see Moneyfact’s table of student accounts

2. How to manage your student budget

You have probably had some experience of managing a budget before but, in many cases, things are about to step up a gear now you have housing costs, bills and other day-to-day expenses to consider.

Sarah Coles advises anyone who receives a maintenance loan to transfer it out of their account on Day One.

“You’ll be paid in just three instalments each year, so there’s a real risk of accidental overspending,” she said.

“Some people immediately transfer enough money for bills and rent into a separate account, so they’re never tempted to dip into cash meant for the essentials.”

Sarah also recommends taking time to complete a budget planner, so you can plan for everything you need to spend.

“It’s incredibly difficult to know what costs you will face when you’re starting out, which is where some help from parents can come in handy.”

Apps such as Money Dashboard can be helpful for this.

3. Avoid debt as much as possible

Student debt is inevitable but avoid letting it spiral by being mindful when considering what borrowing you will use.

We’ve already covered overdrafts in the bank account section. These are a standard part of your account package and provided you use them as an emergency fund as opposed to an add-on to your student loan, you will find it very useful.

Credit cards are another matter. Sarah explained your bank may well try to sell you one but she warned the minimum repayments will make it look like an easy way to afford what you want.

She added: “If you’re not paying it off, you’ll be racking up major interest charges, and it all have to be paid back eventually. If you’re not earning, this is going to give you a real mountain to climb.”

Sarah also advised avoiding store cards – they’re ‘horrendously expensive’ and urged students to be sensible when it came to buy-now-pay-later payment options at the checkout.

“It might feel like a free way to spread the cost, but it’s debt,” Sarah said.

“If you use it, you need to understand exactly how much you’re borrowing, and the total of all your repayments.

“You also need to appreciate the consequences of missing payments – which in some cases will go on your credit record. Like with any debt, think before you buy. If you don’t really need it right now, you shouldn’t be borrowing to pay for it.”

4. Learn some money-saving skills to keep costs down

There are many ways you can reduce how much you spend when you are studying – from taking advantage of loyalty cards to making sure you are up to speed on all the student perks. Here is a quick list of some of the best cost-cutting advice:

Tax: Students don’t pay council tax so check you aren’t being billed. If you are working and earning less than £12,570 you won’t pay income tax so check your payslip.

Student discounts: Check out which retailers offer student discounts and prioritise these when you shop. Sarah suggests signing up to Unidays and Student Beans for online discounts and looking out for brands – Apple, Amazon and Spotify are among them – which do the same. Don’t forget to sign up to the NUS Extra Card and Young Persons Railcard.

Cut your food shop: Use supermarket loyalty cards to earn discounts and see this article for ways to shop smartly and this one for meal planning tips.

Student account selection table
Provider and account Interest-free overdraft Incentives
Bank of Scotland – Student Account Year 1 – up to £1,500
(0-6 months £500,
7-9 months £1,000
and 10 months+ £1,500)
Year 2 to 3 – up to £1,500
Year 4 to 6 – up to £2,000
Free to register for Everyday Offers.
Earn up to 15% cashback from selected retailers.
Barclays Bank – Student Additions 0-11 months £500
Year 1 – up to £1,000
Year 2 – up to £1,500
Earn cashback through Barclays Cashback.
Blue Rewards is available as an add-on for £5 per month.
Free access to Perlego for 12 months, a digital library of university textbooks, for accounts opened between 8.7.22 and 30.11.22 and redeemed before 31.12.22.
Halifax – Student Year 1+ – up to £1,500 Cashback Extras – Earn up to 15% cashback from selected retailers. Credit interest of 0.10% AER/gross.
HSBC – Student Bank Account Year 1 – at least £1,000
Year 2 – up to £2,000
Year 3 – up to £3,000
Receive £100 when opening and make a minimum of 5 transactions within 30 days of opening.
Eligible for Regular Saver account.
Lloyds Bank – Student Year 1 – up to £1,500
(0-6 months £500,
7-9 months £1,000
and 10 months+ £1,500)
Year 2 to 3 – up to £1,500
Year 4 to 6 – up to £2,000
Free to register for Everyday Offers.
Earn up to 15% cashback from selected retailers.
Nationwide Building Society – FlexStudent Year 1 – up to £1,000
Year 2 – up to £2,000
Year 3+ – up to £3,000
No charges for using debit card abroad.
NatWest – Student Year 1 – up to £2,000
(1-4 months £500,
5 months+ £2,000)
Year 2 to 5 – up to £2,000
Receive £80 paid to your account within 10 days from opening a new or converting an existing account, a tastecard, valid for 4 years giving 50% off food or 2 for 1 meals, plus offers on entertainment and shopping. Must register for mobile/internet banking and choose paperless statements within 30 days of opening. Offer valid from 4.7.22 to 31.10.22.
Free 24/7 Emergency Cash Service.
Royal Bank of Scotland – Student Year 1 – up to £2,000
(1-4 months £500,
5 months+ £2,000)
Year 2 to 5 – up to £2,000
Receive £80 paid to your account within 10 days from opening a new or converting an existing account, a tastecard, valid for 4 years giving 50% off food or 2 for 1 meals, plus offers on entertainment and shopping. Must register for mobile/internet banking and choose paperless statements within 30 days of opening. Offer valid from 4.7.22 to 31.10.22.
Free 24/7 Emergency Cash Service.
Santander – 123 Student Current Account Year 1 to 3 – up to £1,500
Year 4 – up to £1,800
Year 5 – up to £2,000
Free 4-year 16-25 Railcard for new customers including discounts on other activities.
Earn up to 15% cashback from selected retailers.
Preferential rates, offers and discounts at 123 World.
TSB – Student Year 1 – up to £1,500
(0-6 months £500
7-9 months £1,000
and 10-12 months £1,500)
Year 2 to 6 – up to £1,500
Credit interest of up to 5% AER (4.89% gross).
The list of student accounts is only a selection. All overdrafts are subject to the applicant’s status.
Source: Moneyfacts.co.uk.

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