Generally, banking institutions will offer students specialised current accounts. Since the majority of students are living on a tight budget, there is very little demand for student savings accounts and therefore they are rarely, if ever, available. Student accounts are therefore usually student current accounts. A student current account operates in much the same way as a regular current account.
A current account is a standard bank account provided by a bank or building society designed for everyday management of cash flow, for example bill payments and salary deposits. There is not usually any charge for depositing or withdrawing funds and you need not give any notice to do so. Usually the account will be relatively free of charge to use and there are very few restrictions on managing your money. You will be given a debit card allowing you to shop cash-free: payments are electronically deducted from your account balance when you make a purchase.
Student accounts usually differ from regular current accounts in a few ways. You are even less likely to incur charges when using a student account, since they are designed to be easy to use and unrestrictive. Times when you may have faced a charge with a regular account, perhaps if your balance falls below a certain amount, will not be a problem with a student account. Student accounts also tend to have extra 'student friendly' benefits, such as a reasonable rate of interest and various types of discounts and rewards programs. You may also receive higher interest rate incentives when you maintain a growing balance per month and don`t withdraw more than a certain amount of times in a month with a student account.
Interest rates, that is, the money that you earn on your account balance each month, tend to be low for most current accounts and perhaps even lower for student accounts. However, increased competition in the student account market has led to improved conditions for student account holders. New customers can expect better deals with no fees, because the banking institutions must compete against one another for student custom.
Student Credit Card
A credit card is an electronic plastic card which enables you to pay for goods and services without using cash. However, unlike a debit card which uses the money in your account to cover these payments, a credit card acts as a form of loan. You make a purchase and use the credit card to pay, the card provider honours the payment and you must repay the provider. If you wish, you can repay a percentage of the payment and pay the rest at a later date; in exchange for this service, the card provider will charge you interest on your outstanding balance. If you choose not to repay the total balance immediately, the interest charged will increase the amount that you owe and thus you will end up paying more for the goods or service than they originally cost.
A student credit card is one designed to assist students with managing their finances whilst on a limited budget. For this reason, you may find that a student account offers more flexible money management than a regular credit card; for example, you may be allowed an interest-free period for repaying purchases so that your outstanding balance does not automatically incur extra charges. You should also be offered a low rate of interest to enable you to use the credit card without facing huge repayments. However, because students have a very limited cash flow, the credit limit on a student credit card will usually be small to restrict excessive spending and potential debt. Similarly, some credit card providers will consider students to be risky candidates for a 'loan' and will not offer them a card, or will charge a higher interest rate to discourage spending.
If you are offered a credit card by your student account provider, you may find that this banking package offers you the best deal. If you repay the outstanding balance on the card in full each month, the use of the credit card will be free, you can manage your money more flexibly, and cover emergency costs. Otherwise, a debit card is your best option as you can only spend what you have access to in your account.
