Beware of student current accounts that don't make the grade

As thousands of students prepare to receive their exam results this week (19 August) with dreams of university life ahead of them, moneysupermarket.com, the price comparison website, urges them to take time to shop around to find the best banking package during their student years. Banks and online financial services companies are once again aggressively competing to get students to sign-up with them before they head off to university, many enticing them with gimmicks and special offers.

(PRWEB) August 22, 2004 -- Stuart Glendinning, director of moneysupermarket.com, the price comparison website, says: "Many students will find themselves hard-pressed financially whilst at university, with the potential to leave heavily indebted - often up to 16,000*. Therefore, it is essential that they are sensible when planning their finances pre-university, in particular with their choice of current account.

"Many of the high street banks use free gifts to attract students - the music vouchers & free travel. The first priority for every student should be to find an account that offers an interest-free overdraft and charges no fees. After this, consider access to money from local branches and cash machines. Freebies should be the last consideration, not the first!"

However, banks will court students when it comes to current accounts, yet, when it comes to credit cards, these young consumers will find that many of the competitive deals out at the moment are not on offer to them.

As such, many providers are unwilling to take the risk of lending without a track record thus young people will have a limited choice. However, if they do obtain a card, the credit limit will be low, albeit this is good as it limits the students' exposure to debt, which is appropriate given the interest rate will often be in excess of a hefty 17%.

Glendinning concluded: "If students do want to use credit, then, other than student loans, this will often evolve around an overdraft, a credit card offered by the current account provider or expensive store cards. Where possible, I would suggest students utilise cheaper forms of credit, such as Student Loans or an interest-free overdraft, before considering a credit card."

[ http://www.moneysupermarket.com/cards/credit_card.asp ]