Being a student is always tricky – you’re somewhere between being a child and being a fully-fledged adult and you’re trying to find your way in the world. Student bank accounts are just one example of how students get a little bit of a short deal during their late teenage years – they need their own bank account, but they’re unable to get an adult account and they’re too old for a children’s account. Luckily, there are a few bank accounts that are specific to students – although which bank account you end up with depends on which type of student you are. Take a look at our quick guide to student bank accounts for more advice.
Young Person’s Account
Most banks offer a “young person’s account”, usually targeted at students either just below the age of 16 or just over the age of 16. Generally, young person’s accounts offer most of the benefits of a children’s account, but in a lot of cases, young person’s accounts have limited functionality in terms of paying money in or out. Most young person’s accounts can accept money, while debit cards associated with young person’s accounts can pay for items online and in shops and withdraw money from automatic transaction machines, but many of them can only pay out in cash. That means that direct debit payments cannot be set up from a young person’s account, although this will differ from bank to bank.
Student accounts are typically offered to students in high school and college. Student accounts are virtually the same as an adult account. Students can set up direct debit payments, pay for items online and in store, use their debit card to withdraw cash from ATMs and set up automatic payments. Generally, student bank accounts are completely free, meaning that students don’t have to pay to have a bank account. However, some student bank accounts will also offer an overdraft facility of up to $2000, depending on status, which students can use as a cushion if they run out of money for paying their bills. Overdrafts are generally free if you pay back any money owed on the overdraft within the month. If not, there is generally an interest charge of up to 30%. If you must use your overdraft facility, try to pay it back within the month, if you can.
Graduate accounts are what students move onto when they graduate college. They have all of the benefits of a student account, including the ability to make and receive payments, the ability to withdraw money from an ATM and the ability to access an overdraft. The major difference between a student account and a graduate account is the amount of overdraft available. Typical graduate accounts could come with an overdraft of up to $4000, depending on status. The reason for the increase in overdraft on a graduate account is to give students a helping hand when it comes to paying their bills and finding a job when they are fresh out of college, although the interest rates typically remain the same.
Student bank accounts differ from bank to bank, so ask your local bank about anything you’re not sure of.