Banking

Banking can be quite confusing especially if this is the first time you have had to arrange payments of rent and bills.

Below you will find some information on basic banking facilities and how they work.

For free and confidential advice, please contact Advice Space.

To avail of free financial advice, please contact Kith & Kin.

• Current Accounts

  There are a number of bank accounts to chose from. For more information on each, please see the table below:

  Current Account Types

  Type of Account	Features
  Basic Bank account Ideal if you have poor/no credit rating	Pay bills by Direct Debit or standing order Receive payments such as wages or benefits
  Current Account	Pay bills by Direct Debit or standing order Receive payments, such as wages or benefits Arrange an overdraft Withdraw money from cash machines Pay for purchases using debit card Use banking apps to make payments Set up text alerts to advise when funds are low
  Student account The benefit of a student account is access to an interest free overdraft. See Overdrafts below for more information.	Pay bills by Direct Debit or standing order Receive payments, such as wages or benefits Arrange an Interest Free overdraft for the duration of your undergraduate course Withdraw money from cash machines Pay for purchases using debit card Use banking apps to make payments Set up text alerts to advise when funds are low Some banks offer discounts and freebies to attract new customers
  Graduate account If your bank doesn't  offer this facility, shop around for the best deal.	Pay bills by Direct Debit or standing order Receive payments, such as wages or benefits Arrange an Interest Free overdraft for a set number of years after graduation Withdraw money from cash machines Pay for purchases using debit card Use banking apps to make payments Set up text alerts to advise when funds are low Many banks offer deals to secure you as a long-term customer

  Get your free Personal Banking Guide.

  Did you know?

  Contactless Payments do not always automatically deduct from your 'Available Balance' and can take up to 3 banking days or longer to deduct from your account.

  If you do not keep an eye on your spending, you could easily spend more than you have in your account as the payment is authorised based on your 'Available Balance'.

  TIP! Take an extra 10 seconds and use chip and pin rather than contactless to better track your spending.

• Overdrafts

  What is an overdraft?

  Overdrafts are an arranged facility that allow you to borrow money through your current account. They are flexible, easy to manage and do not require you to make a monthly minimum payment, unlike credit cards and personal loans.

  Ordinarily, overdrafts carry with them costly interest rates. However, as a student, you can ask your bank to change your current account to a Student Bank Account (or their equivalent). This will give you access to an interest free overdraft for the duration of your course, plus typically one year after graduation, allowing you time to clear the overdraft interest free.

  If your bank does not provide this facility, simply find one that does and you can use the Current Account Switch Guarantee to change your account hassle free. Mature students can also avail of this service, Mature students can also avail of this service, shop around for the best Student accounts.

  How do I set up an overdraft?

  A student overdraft can be applied for through online banking or in person at your local branch. When you apply for an overdraft, your bank will agree an overdraft limit based on your current circumstances and your ability to repay. Providing you do not exceed this limit, you will not be subject to any additional fees or charges. Exceeding your agreed overdraft limit is known as being 'overdrawn' and you will be subject to fees and/or charges regardless of the type of overdraft account held.

  Once approved, your overdraft limit will be applied to your account and your 'Available Balance' will increase by the agreed overdraft limit. For example, your 'Current Balance' is £125 with an arranged overdraft of £1,000, meaning your 'Available Balance' will show as £1,125. Some banks will show the available overdraft balance separate.

  Once you are using the overdraft, your current balance will show as a negative amount. If your overdraft limit is £1,000, the maximum negative balance you can have is £-1,000 before incurring any fees or charges for going 'Overdrawn'.

  Overdraft Information

  Benefits	Watch out for
  Flexible borrowing Think of an overdraft as a safety net. If rent is due a few days before your wages are received, your overdraft will prevent direct debits bouncing.	Stay within your overdraft limit Keeping an eye on your 'Available Balance' will ensure you stay within your overdraft limit and will avoid any charges or fees. If you continuously breach the terms of your overdraft, your bank has the right to remove this facility and ask for repayment in full.
  No monthly repayment charges You can dip in and out of your overdraft as your needs require	Keep your account active If your bank doesn't see money moving in and out of your account, they can remove your overdraft facility. It is best to have your student finance and part-time wages paid into this account.
  No early repayment charges Your student loan being paid into your account will clear your overdraft without an early repayment charges, and keep the facility open should you need it during the rest of your studies.	Pay attention to the small print Typically, you should have one year after graduation to repay your overdraft interest free. Check your overdraft agreement to ensure your interest free period does not expire before this. You may need to update your bank if your course length increases.
  Cheapest way to borrow money With a student bank account, you can access an interest free overdraft, making it the cheapest way to borrow money... other than your mum!	Student Bank Account Ensure your bank has moved you onto a student bank account, this will give you access to an interest free overdraft.

• Savings Accounts

  There are a various different types of savings accounts, we have listed a few below to help get you started:

  Savings Accounts Types

  Type of Account	Features
  Regular saver account	For those who want to commit to saving on a monthly basis, normally a minimum amount of £10 is required Encourages good savings habits Ideal if saving for an event, such as wedding or holiday May be restricted on the number of withdrawals a year
  Instant Access Savings account	For those who want the flexibility to save when they can afford it Ideal to keep excess funds separate to avoid temptation to spend Normally offer higher interest rates than a current account No restriction on the number of withdrawals per year
  Cash ISA	For those who want  the flexibility to save when they can afford it Earn tax free interest on your savings (max. deposit of £20,000 per year) Normally offer higher interest rates Must be a UK resident aged 16 or over.

  Why save?

  Most people save for one of two things:

  1. To prepare for eventualities, such as car breakdown, replacing a washing machine or in case of job loss.
  2. Saving for a big event, such as new car, buying a house or dream holiday.

  Make your money work for you. Putting aside money can generate a little interest. The higher the AER (Annual Equivalent Rate) the more interest you will get on your savings.

  Having some savings behind you will help you become more financially secure. This means if an unanticipated cost cropped up, you wouldn't have to borrow money, potentially at a high interest rate. You may think that you can't afford to save, however the trick is saving little but often. Cutting out that coffee once or twice a week could allow you to save £20-£25 per month. That's an average of £260 a year.

  The table below shows how saving a little each week adds up over the year. (Please note that these figures do not include any interest your savings accounts will offer you.)

  Savings Rates

  Weekly saving	In one year	By graduation*
  £2.50	£130	£368
  £5	£260	£736
  £10	£520	£1,473

  *Based on a three year degree & graduating in June (34 months)

• Types of Borrowing

  If you are unable to pay for something up front, you may need to apply for credit to make your purchase. Before applying for credit, it is important to understand the different types of credit available.

  Types of Borrowing

  Type of Credit	Features:
  Overdraft	See Overdrafts section above.
  Personal loan	Fixed amount borrowed over a set period of time. Set amount repaid in monthly instalments Typically fixed interest rate There may be a minimum amount of borrowing required Interest rates can vary depending on the amount borrowed Interest rate advertised may increase if you have poor or no credit rating. There may be an admin fee if you wish to repay early
  Credit Union loan	This is a community cooperative, where members save and can borrow money (based on the savings other members have deposited) Loans may be based on the amount of savings you have, i.e you could borrow twice the amount held in savings. Interest rates may vary up to 12.6% APR. Set amount repaid in weekly or monthly instalments Typically allow over-payments and early repayment without any admin charges
  Credit Card	Can be used to buy goods or services, there may also be an option to transfer money into your current account (at an additional charge) Items paid using a credit card will be charged to your account and a statement will be posted or made available online monthly A monthly minimum payment must be made, on time each month, in order to avoid additional charges Balances can be partially cleared or paid in full each month. Can transfer a balance from another credit card for a fee (this can used to avail of interest free deals) Interest rates can vary depending on your credit rating. Many providers offer interest free deals for fixed period of time.
  Payday Loans	Short-term loans that are intended to carry you over until your next pay-day Credit typically taken over 2-3 months, possibly longer Interest rates are extremely high (up to 1,500% APR) Payments are taken directly through a pre-arranged debit card charge Missed or late payment carry hefty fees Loan company may offer extensions or another loan if unable to repay, carrying additional fees and charges.
  Hire Purchase (HP)	Typically used to purchase a car or white goods, where the loan is secured against the car Typically a deposit of 10% is required Fixed interest rate with fixed monthly repayments Repayments are made over an agreed period of time (from 12 - 60 months) The financed product is not yours until the final payment has been made Short-term agreements can be very costly
  Personal Contract Purchase (PCP)	Typically used to purchase a car. The amount financed is the difference between the current value of the car and the predicted value at the end of the PCP agreement Typically a deposit of 10% is required Fixed interest rate with fixed monthly repayments Repayments are made over an agreed period of time (from 12 - 48 months) At the end of the agreement, you can hand the car back and pay nothing, trade the car in and start again or pay the resale value of the car and keep it. If the car has exceeded the agreed mileage or any damage can incur additional charges or fees.

  What is secured borrowing?

  Typically most borrowing is unsecured. Secured borrowing means that the lender will require something as security in the event that you are unable to make your repayments, typically this is your house.

  For those who have taken a Credit Union loan, they may have been told that their loan is a secured loan, meaning that any shares (savings) held with the Credit Union will be held as security in the even that you cannot repay your loan. During this time, it is unlikely that you will be able to access these savings.

• The True Cost of Borrowing

  During your time at Ulster, you may need to make use of credit facilities to help with unanticipated costs you don’t have money put aside for. If this is the case, be money-aware and weigh up all your options before jumping at the first company that will lend you money.

  • Where possible, avoid buy now pay later options. If you can't afford it now, can you save and pay for it upfront at a later stage.
  • If saving first isn't an option, read - Do you need to borrow?
  • How much will it cost? All credit facilities come with a cost. In the UK lenders must display the APR (Annual Percentage Rate) of their products so that customers can compare the interest rate with other lenders, and in turn see the true cost of their borrowing. The total interest paid is how much the lender is charging you for borrow money from them.

  • Example 1 – Personal loan:
    • You borrow £2,500 and repay it back over 3 years
    • APR is 17.6%
    • Total repayable £3178.44
    • Total interest charged £678.44
  • Example 2 – Credit card:
    • You spend £750 using a credit card and repay it back over 12 months
    • APR is 34.9%
    • Total repayable £899.22
    • Total interest charged £149.22
  • Example 3 – Payday loan:
    • You borrow £300 and repay it back over 71 days
    • APR is 1301.2%
    • Total repayable £470.40
    • Total interest charged £170.40

  Check out the Consumer Council’s Borrowing Money guide.

  NEVER BORROW MONEY FROM A LENDER THAT IS NOT REGULATED BY THE  FINANCIAL CONDUCT AUTHORITY

• Credit Ratings & Reports

  What is a credit rating and what does it do?

  A credit rating is what financial institutions use to assess your ability to pay back the money they lend you. Lenders look at your past repayment behaviour in order to predict your future behaviour, basically it is a risk assessment tool.

  If you have never borrowed before, you are unlikely to have a credit rating, and the first chance you get to start building one up, may be by using a student overdraft or mobile phone contract.

  If you have borrowed before, but have made late payments or missed some, this may have put a few red marks against your creditworthiness.

  To register for your full Experian Credit Report FREE – sign up to Money Savings Expert’s MSE Club.

  If you are currently paying for a credit report – sign up to the MSE Club and cancel your current subscription. This will have no effect on your credit score, it will simply save you upwards of £14.99 per month!

  How to boost your credit rating

  Register to vote.

  Do not withdraw cash on credit cards, this is seen as poor money management by lenders.

  Never miss payments or be late in paying them.

  Beware of opening bank accounts with friends – you will be financially linked and if they have a bad credit rating it can have a negative effect on your own future borrowings.

  Avoid payday loans and gambling/betting, these can kill your chances of getting a mortgage or loan in future years.

• Dealing with Debt

  Most students can be expected to get into some debt while studying at university, whether this is taking out loans or using the interest free overdraft facility on student bank accounts. Taking out loans to invest in your future can be a positive step, however, it is vitally important that this is managed carefully, ensuring you can afford the repayments, making monthly payments on time and keeping within the terms of your credit agreement, rather than leading to a serious financial crisis.

  Some debt can be easily managed by adjusting bad spending habits, putting stringent budgets in place and generally being more disciplined with your money. However, other debt can arise from unforeseen circumstances. Regardless of the reason, the most important thing is to manage your money before it manages you.

  Debt is not just a money issue, it can affect a number of different areas in your life, therefore it is very important to get advice sooner rather than later.  If you feel that your debts are building up and becoming unmanageable, don’t bury your head and hope they go away, seek advice and help as soon as possible.

  For sources of help and support for debt management, please see below.

  Sources of Help

  Source	Type of help	Contact
  StepChange Debt Charity	Offers free, confidential advice and support to people worried about debt.	Tel: 0800 138 111 Mon to Fri: 08:00 to 20:00 Sat 09:00 to 15:00 www.stepchange.org
  Advice NI	Provides confidential and impartial debt and money advice, helping you manage your money and debt issues so you can take back control.	Tel: 0800 028 1881 Mon to Fri: 09:00 to 17:00 Text ACTION to 81025 Email: debt@adviceni.net https://www.adviceni.net/advice/debt
  Christians Against Poverty	A national debt counselling charity which offers a unique in-depth service.	www.capuk.org
  Payplan	Provides free debt advice and free debt solutions for anyone experiencing financial difficulties, whatever your circumstance or situation.	Tel: 0800 280 2816 Mon to Fri: 09:00 to 20:00 www.payplan.com

• Sources of Financial Support
  • If you are a registered Ulster University student relying on credit facilities to meet your daily living costs, you may be eligible to apply for Financial Support.
  • If you are in receipt of Social Security Benefits, you may be eligible to apply for a Budgeting Loan.
  • If you are a registered student from a developing country, who intends to return home after your current course, and your qualification will benefit your home country, you may be eligible to apply for a Grant from Churches Together in Britain and Ireland.
  • You may be eligible to apply for charitable Grants in your local area.