THOUSANDS of students will soon take that first step down the road to their future and set off for university after Scotland's bumper set of Higher results.
But it takes more than academic prowess to make a success of student life. A good grip of
basic arithmetic to keep debt under control is also vital, and when it comes to managing your finances, choosing a good bank account is an important first step.
Banks bend over backwards to entice students aboard, in the hope that these will be tomorrow's high earners and will stay with them when the money starts rolling in.
But once they have caught you, they can come down on you hard if you step out of line. Some will be very unpleasant until you get your finances under control, and these are the nice guys.
Others will hammer you with eye-watering charges, burying you in a mountain of debt.
The secret is to stay on top of your finances and get more out of your bank than it gets out of you. This comes down to picking the best account for you by carefully assessing four essential criteria:
• The size of the interest-free overdraft
• The interest charged on overdrafts above that
• The value of the incentive package
&149 The location of branches
If you are going to need to borrow money, then it makes sense to opt for the largest interest-free overdraft on offer, which this year is available with Bank of Scotland and its sister bank Halifax. They will let you borrow £3,000 while an undergraduate, and for a year after graduation.
However, the loan is credit-scored, which means it is not guaranteed. Although in theory it will be available from day one, the bank is likely to offer less initially until it sees how you manage the account, and then increase it in tranches.
Royal Bank of Scotland has the next biggest overdraft at £2,750. Lloyds TSB and the Co-op lend £2,000 over three years, but rising in tranches, whereas Smile, the Co-op's internet bank, pegs the overdraft at £1,800 in year three.
Barclays is more miserly, limiting interest-free overdrafts at year three to £1,500, while NatWest will loan £1,600, although both go up to £2,000 for fifth-year students. Clydesdale is meanest of all, offering none.
The next crucial figure to look at is the unauthorised overdraft rate. Usually customers are charged an authorised overdraft rate where they agree a loan with the bank before taking the money, and an unauthorised rate when they help themselves without warning. Interest on the first is usually a fraction of the latter.
However, when it comes to students the picture is more complex. Some banks offer students an authorised overdraft rate if they borrow over and above the interest-free loan with the agreement of their bank manager, and a higher rate if they unilaterally slip into the red.
Other banks, though, treat the interest-free overdraft as the agreed loan, and anything over that as unauthorised.
For example, Bank of Scotland has an authorised rate of 7.2% and an unauthorised rate of 24.2%. Similarly, the Co-op and its internet bank Smile have a 9.9% authorised rate and 15.9% unauthorised rate.
Students go straight onto the unauthorised overdraft rate of 29.99% at RBS. The Lloyds charging structure is more complex, but essentially interest is charged at 8.2%, though customers pay a flat £15 monthly fee on top, plus daily charges of £6 for being less than £25 overdrawn, £15 for being between £25 to £100 overdrawn and £20 for being overdrawn by more than £100.
The next biggest draw is the incentives, although Jennifer Crichton of National Union of Students Scotland warns not to get carried away and let the freebies cloud your judgment.
"Don't be tempted to choose a student bank account on the basis of the freebies, as these are just a ploy to get your business," she says.
"Instead, look at the interest-free overdraft facility available and how much interest is charged above the interest-free limit."
This year Royal Bank of Scotland looks like offering the best freebies. If you open your account online, you can qualify for a free webcam. You can also choose between either £100 cash or a free railcard.
The Abbey is offering new recruits £50 cash, although it pegs its interest-free overdraft to £1,500 in the third year, rising to £2,000 in year five.
Lloyds TSB will pay £20 cash, but the other institutions largely offer discount vouchers, if anything.
Convenience is another crucial factor when choosing a bank account. While most students bank online, you still need to be able to access cash, and at this early stage in your banking career it can be useful to have advisers nearby to discuss problems. Many branches on or near campus are geared up to help students with their financial worries.
And don't forget about credit interest, ie what the banks pay you when you have money on deposit. Here the Abbey comes out tops, paying 4%; followed by Smile's 2.25%, Royal Bank of Scotland's 2.02% and Bank of Scotland's 2%.
But what if you don't want to borrow at all? Lloyds TSB has a special student account designed for Islamic scholars whose beliefs prevent them from taking on debts. As such, the account has no interest-free overdraft.
However, if a student were to get temporarily into trouble, the bank can simply return any transactions for which he does not have the funds. Alternatively, if the customer wishes the item to be paid for and consults the bank in advance, it can honour the item while meanwhile charging a £15 monthly management fee.
Finally, Crichton also suggests you keep an eye on your account to make sure it continues to be competitive.
"Deals can change, so it's worth doing some thorough research on a regular basis. Banks know you are not likely to bother switching accounts, no matter how bad the service is, so if you are not happy with the service you are getting, prove the banks wrong and switch accounts to get a better deal."
Next week: how to cut the cost of a degree via grants, loans and bursaries
Overdraft was my top priorityNURSERY nurse Danielle Docherty knows going back to college at the age of 25 isn't going to be child's play, but she hopes it will open doors to wider horizons that will make the sacrifices worthwhile.
Danielle is already a qualified nursery nurse, and works at Ferryhill Primary School in Edinburgh. But she is returning to study at Edinburgh University in the hope of becoming a graduate in child care.
Danielle, who lives in Edinburgh, said: "If I get the BA it will open doors for me. I could go on to become a teacher or social worker, and earn a higher salary."
To help her through college she has opted for a Bank of Scotland student account. She said: "I was attracted by the £3,000 interest-free overdraft, which was a big pull. But I already have other relationships with the bank and have always had good experiences, so it seemed the natural thing to do."
