I thought the results from this were quite interesting and helped to show what people (well, students at least), actually considering when opening an account. It is a few months old (4th May) but I doubt much has changed between then and now.
Even with students, it seems a lot of people are happen to just stick with their previous bank, with 40% saying this is how they chose a student account.
It also seems students are a lot more satisfied with their banks that the general population is, but may be due to students rarely interacting with their banks due to most products not being of interest to them.
They also have some good information on the use of cash and ISAs.
I wonder if this trend is entirely pandemic or indicative of a more general trend away from cash. 12% of students never using cash seems significant to me.
It hasnât really occurred to me before that monzo and other app based banks donât really have any dedicated student features or offers. Which feels like a missed opportunity as youâd think an app based bank would appeal to a young student population.
They need to get profitable, and students are very unlikely to help them reach profitability. As such, students wonât be a target market anytime soon
But the ease of opening an account with digital banks could be an attractive thing, particularly for international students
I bet Monzoâs time as a pre-paid card also hampers their odds as many likely still believe that to be the case and that perception will probably persists for quite a while.
I havenât used cash for ages. I havenât needed to. Everything is either online where you have to use a card or in-person where using a card is much easier. Iâve never needed to use cash.
As for cash, I think itâs wider than students. I would carry cash on me for the places that would frown at a low cost card transaction, theyâve basically all gone now. Thereâs a few edge cases of course.
Freebies and the overdraft definitely draws students to certain accounts. The best one for most is Santander with a free Railcard and a guaranteed ÂŁ1,500, increasing in years 4 and 5 if applicable. For banks like Monzo, this probably isnât the way to go to make a profit. The banks are playing the long game and hoping students stay with them after they have graduated, but this long game shouldnât be the focus for Monzo at the moment.
Yup. I donât know if this is still the case, but banks used to throw large interest free overdrafts at students all willy nilly. And young, naive, often financial-illiterate students love it.
I had a ÂŁ2000 interest free overdraft with my Barclays Student account back in the day. Donât think I ever used it though.
What theyâre not so transparent about is that interest free overdraft doesnât last forever, and more than a handful of my friends learned that the hard way.
I donât know if any student accounts donât over interest-free overdrafts. I think Santander is the only bank that guarantees their overdraft limit with the rest being âup-toâ. Many will transfer your student account to a graduate account when you graduate.
I think students probably need to read the terms and conditions a bit better if they think the overdraft lasts forever. Most bank T&Cs arenât to long and are quite easy to understand.
Iâm not even sure if theyâre credit checked or if they make sure the student can even afford it. I think itâs quite an evil tactic if you ask me though. One of my younger siblings was one of those who ran headstrong into university all YAYYYY Free Money!!! PARTaY TIME!!! and soon maxed out their overdraft within a few weeks. It was incredibly irresponsible, but I also feel the bank is equally as irresponsible for enabling students with those overdrafts.
After graduating I believe they move you onto a graduate account, which is sort of like a grace period to essentially pay off your overdraft, but some banks do offer perks and services to help graduates get a job. Then it becomes a standard account and your overdrafts gains an interest fee. For a few people itâs not until this point they realise the error of their ways and the hole theyâve dug for themselves. Not easy to climb out of at that stage either, when those fortunate enough to break into their field are likely still in entry level roles. I feel for them.
I suspect this explains why traditional banks are still very popular among students, when youâd think banks like Monzo and Starling are more fitting for their demographic. I expect itâs the notion of essentially what is seen as free money that leads them to have a high satisfaction too. Iâd love to see a poll done whereby former students are asked these questions 3 years after graduating.
They also offer credit cards to 18 year olds who get a job and start working. Itâs all designed to put you into long term debt. But also no reason students should need any special looking after, if anything they should be the group most able to understand the terms they are entering.
Kids should be educated more about finance and debt imo, because as soon as you are 18 its a Wild West for everyone
Agreed. But are they though? I was certainly never taught anything related to finance. I mostly had to teach myself as I navigated the financial world.
Someone from a bank (Halifax, I think) came into school to talk about mortgages. That was the only financial help I remember getting. Still donât know why they thought mortgages were the most important thing to teach teenages about.
Thereâs a big move in higher education for this coming academic year to try to address the skill gaps for incoming first years that have had a significantly disrupted education for the past two years. Universities can no longer expect first years to have any experience doing in-person: presentations, group work, exams etc. Part of this move is taking the form of âgraduate attributesâ that a university will strive to uphold often through the introduction of course content dedicated to these soft skills (including financial skills - made this long side-track relevant in the end haha).
My point being, in a roundabout way the pandemic has increased the focus on soft skills education in schools, colleges and universities for this coming academic year. So maybe in a few years we will start to see improvements in financial literacy among younger people.
It may have changed but I recall dealing with the bank much more frequently when I was a student due to the need to apply for interest free overdrafts etc, then you have to afterwards.
I didnât have to do anything to get my ÂŁ1,500 overdraft apart from register for online banking and deposit ÂŁ500. It was automatically increased from the ÂŁ250 (I think) they give you when the account is opened. Other banks may be slightly different as Santanderâs overdraft amount is guaranteed but it would seem strange to me if banks havenât automated the process.
UCAS now provide a code to students which they can use to verify their student status, so I think most banks integrate with that and allow new accounts to be opened online.
Managing the account on an ongoing basis also doesnât seem to require branch visits any more as most banks have shut their university branches (Santander has shut all of them) and I imagine they wouldnât have done this if they didnât have online or automated systems in place.
