If talk of APRs and overdrafts has your head in a spin, our handy ‘how to’ guide will soon sort out your banking woes…
PICK A BANK
Whether you want to set up your first account or you think it’s time to get a better deal, the big question is – how do you pick a bank? Shop around for an account which will meet your needs. At the start of term, lots of high street banks start dishing out freebies to people opening student accounts. Don’t let the promise of a free camera or cinema passes cloud your judgement!
Before you sign up for anything, make sure you read the small print. When you sign your name, you’re agreeing to the bank’s terms and conditions so make sure you know and understand what they are.
SET UP AN ACCOUNT
To set up your account, you’ll need ID to prove who you are, such as your passport, driving licence or birth certificate. On top of this, you need proof of address – this can be in the form of a bill or, if you don’t have any, one in your parents’ name if you have the same last name.
If you’re applying for a student account, you’ll need proof of your student status too. If there’s anything you’re unsure of, whether it’s in the small print or on the form itself, don’t be afraid to ask for help.
BORROW MONEY
No matter how much cash you have, it never seems enough – unless you’re Simon Cowell. If making your budget last is a problem, you might have the option of having an overdraft. An overdraft gives you some extra money to spend after your account hits £0.00. For every day that you’re in your overdraft, you may be charged interest. As a student, look for a bank which offers 0% on borrowing –meaning you don’t pay any interest up to an agreed amount. As soon as money’s paid into your account, it pays back your overdraft. Whatever you do, don’t look at this as ‘free money’ – depending on your interest rate, it can be costly.
With a credit card, your bank will pay for your TopShop habit and then bill you every month with what you’ve spent in the last four weeks. With each bill, you have to pay a minimum amount but the remainder will build up additional interest meaning you pay back more than you borrowed. If you absolutely must have a credit card, look for one which offers a low APR (annual percentage rate) – the higher the APR, the more you have to pay back if you don’t pay off the full amount straight away.
STAY ON TOP OF THINGS
The secret to managing your money effectively? Organisation! Opt for an account which offers online banking so you can log in, check your balance regularly and actually look at all of your debits and credits. Make note of any direct debits, like your phone bill or gym membership, so you don’t get charged for being overdrawn.
Get used to dealing with the ins and outs of your account now to help you on the road to well-balanced banking…
MORE INFORMATION
RBS Moneysense
rbsmoneysense.co.uk
The information provided does not constitute personalised financial advice, it is important that you seek professional advice to suit your individual circumstances.
