This article first appeared in City Press
The more traditional banks offer accounts tailored to young people and students. Some require you to be a full-time student, while others simply look at your age as a qualifying criteria. These accounts come with lower monthly fees (some even free), data deals, general lifestyle benefits and other enticing offers to attract new customers.
It can be tricky deciding which type of account to open and even when researching this article I found it a little overwhelming reading through the various products. Unfortunately, there’s no exact way to compare accounts as they each offer unique deals when it comes to bundled transactions, fees and linked partner awards.
The fees are generally much lower than a standard transaction account and this is possible as students tend to be low-intensity users and are far more inclined to use mobile banking and cashless solutions rather than traditional in-branch transactions. Some of the accounts do, however, hike rates when transaction behaviour becomes more intensive and exceeds the monthly limits of the specific account.
What type of banking do you need?
Before trying to figure out which bank and product is best for you, start by thinking about what it is you need.
- How much cash do you tend to use and how often do you need to withdraw cash?
- Do you have a part-time job and how often are you depositing money?
- How many direct debit orders do you have set up?
- Do you want to save money and earn interest?
- How important is a brand name to you? Does having a specific bank card really make a difference?
Once you’ve assessed your needs you can use the information to help you find a product that suits you best.
It’s important to note that none of these student accounts offer interest on positive balances and you’ll need to open a linked savings account. The options include accounts where your money is immediately accessible, call accounts, fixed deposit accounts and even tax-free savings accounts. This is quite standard across all banks, with the main difference being interest offered.
You do, of course, also get banks that offer great low-fee accounts that are not specifically geared towards students, but which certainly meet all their requirements and offer great interest rates on savings.
Assessing the lifestyle rewards
Lifestyle rewards look great on paper, but will they really benefit you and to what extent? Some reward programmes are based on the amount of money you spend, while others require you to spend at certain shops or on certain brands. See if these fit your current habits.
It’s easy to assess as you simply need to look at all that’s on offer and see whether anything would have benefited you over the past two to three months. Did you shop at the selected stores and to what value? Did you buy (or do you plan to buy) any of the items offered at a discounted price via the banking reward? And, realistically, how much benefits will you gain?
Take a pen and paper and do some calculations.
Choosing the best account
There are many options to consider, but choose an account that will benefit you based on your usual spending habits and transaction behaviour.
It’s pointless selecting an account with the best lifestyle rewards if none of them are actually relevant to you and paying higher fees just to bank at the same bank as your friends is not exactly clever.
Look at what you need and find the cheapest solution. A free account with minimal fees and high interest sure sounds like a great deal to me.