There are many possible banking services and charges that your bank or building society may include with your student account. A full list of services and charges can be obtained in-branch, or may be given to you when you open your account. The most relevant charges for students will generally be penalties for bounced cheques and unauthorised overdraft withdrawals, as well as charges levied for accessing funds abroad. The more utilised student account services include student loan payments and overdrafts.
Bounced Cheques: A bounced cheque is a personal cheque which cannot be paid because there are insufficient funds in the account to cover the payment. If a cheque returns unpaid it is said to 'bounce' and there are usually penalty charges as a result. If you have limited funds in your account, do not write a cheque that you know will bounce: it will cost you money and result in unnecessary debt. If a cheque bounces and you have no prior record of failed payments, your account provider may agree to waive the charge, especially if you have a good reason for the lack of funds: perhaps because your student loan was delayed.
Accessing Funds Abroad: Many students will choose to travel abroad during the long summer holidays, study abroad for a semester or visit friends who are doing so. Accessing funds abroad is relatively simple when you have a debit card: you can use this to withdraw money from your Australian account at most foreign ATMs. In exchange for this service however you will have to pay a charge to cover the cost of accessing your account abroad. Usually, you will pay both the Exchange Rate Transaction Fee (ERTF) of 2.75% plus a further 2.25% of the Australian amount (up to a maximum of $4). The Australian value of the withdrawal will be calculated using the bank's current exchange rate. If you use your debit card to pay for purchases abroad, you will usually be charged the similar fees. However, increased competition between financial institutions has led to many account providers offering free withdrawals abroad. If you are intending to travel abroad during your studies, it may be worthwhile to opt for a student account which offers you free withdrawals to avoid unnecessary charges during your time abroad.
Overdrafts: An overdraft is an extension of your available funds, may be offered to you by your account provider. Usually you will be charged a fee if you withdraw money from your overdraft, and you may be required to pay interest on the amount that you use. However, student accounts tend to offer an interest-free period or reduced interest overdraft for which you will not incur charges. This essentially enables students with limited cash flow to borrow money from their bank or building society, and continue making purchases or paying bills even when they have very little money. Often, student account holders are able to set an agreed limit with their bank or building society if they fear that they may go overdrawn from time to time. The limit on agreed overdrafts can be extended under certain circumstances at the discretion of the banking institution. Some student account specific overdraft facilities may be extended automatically for each year of the account holder's studies. Make sure to ask your account provider whether or not they will offer you an overdraft facility for your student account; even if you consider that you will not need to use it, it could prove useful to have in case of emergencies.
Student Loan: When you wish to study full or part-time at an educational institution, you are given the chance to apply for a student loan. The student loan is a loan provided by the Government through either a private or public sector body, such as a University or Tertiary college. It is designed to offer financing to students who need assistance to pay for their further education. This loan is offered at very reasonable rates of interest, essentially increasing the debt at the rate of inflation so that when you repay the loan it will be worth the same amount to the government as it was worth when given to you.
