ONCE you've raised you college grant, borrowed a thousand pounds from the bank and saved another thousand by picking grapes in France over the summer, what should you do with all that cash?
While there is no harm in basking for a few days in the glow of all that money - students should always avoid the temptation to leave their college finances in an easily accessible current account, says Ronnie Carraher of National Deposit Brokers. "The problem is that they think because they're flush they can afford to blow some of their money. It gets whittled away very easily if it isn't secure, and if it isn't allocated to specific expenses. I accept that it's very hard to budget when, like most students, you've never had any money - or bills to pay."
National Deposit Brokers, a firm of specialist brokers which finds and monitors best deposit interest rates for private clients add institutions don't tend to have many students on their books ("in fact, we don't have any"), but that said, Mr Carraher insists that they never turn anyone, or any amount that needs a safe deposit home, away.
"It hardly matters where the money is deposited when the sum is relatively low," he says. "The important thing is that the bulk of the cash is relatively inaccessible - say a 30 day deposit account that is also a low DIRT Special Savings Account. The best rates at the moment for smaller sums include Pfizer offering 5.5 per cent, Ansbacher and Anglo Irish Bank at 5 per cent. AIB and Bank of Ireland will give between 2.5 and 3.5 per cent for sums under £3,000."
With the bulk of college money in a safe, 30 day account the student should then arrange for regular funds to be transferred into their student account to meet monthly expenses, and so forth.
All the main banks offer special, low cost student accounts but it is AIB and Bank of Ireland that have the greatest presence on college campuses with either fully established branches (mainly at the national universities and big RTCs) or dedicated student officers in branches close to all the other universities and colleges.
The accounts are all a variation on the same theme in the case of Bank of Ireland's Ascent and AIB's Student Plus accounts, interest of between 1.25 - 1.75 per cent is paid on all credit balances; there are no account maintenance or transaction fees; there is nil commission on foreign exchange transactions and chequebooks (with a dozen cheques only) and ATM cards are provided. AIB emphasise that its 24 hour Banking service (Bank of Ireland's equivalent is Banking 365) means that so long as you and your parents are customers, money - from them - can be transferred to you immediately via the phone line. "It's a very handy facility for a student who needs a train ticket home that night but hasn't a penny in their account," said a spokesman.
Student bank accounts also come with the options of overdraft facilities and student loans at reduced interest rates. In the case of a grant advance, the rate is APR 10.5 per cent, while student loans cost the standard borrowing APR of 11.2 per cent from the two main banks.
Loans, which must be guaranteed by a parent or guardian must usually be two thirds paid off by the end of the college year or in full by the end of the summer. Student loans are usually advanced for just one year.
Every student should consider opening a credit union account if only to encourage good saving habits and further widen their credit opportunities. The credit union doesn't care how much you save, so long as you save it regularly and if there is any complication, it is that they require you live in their geographic area. This is no problem if you continue to live at home during the college year, but might pose some difficulty if you move around throughout your stay in Dublin or Limerick, or wherever. Contact your local credit union for more information.
Finally, give some serious thought to the matter of budgeting. Once the bigger items, like rent and utilities are taken into account there is a temptation to let smaller items, like food, transport, entertainment, take care of themselves, usually with the aid of a handy ATM card. Everyone on a tight budget should leave bank cards (ATM, cheque and credit varieties) at home when they set out each day. There is nothing like hard cash to focus the mind on exactly how much - or how little - you have to spend.
Your student officer at your bank branch or a credit union officer will be happy to help you out with basic budgeting and will also set up standing orders and direct debits to pay rent and other regular bills like the ESB, Telecom and Gas company.
