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It’s all about the overdraft
Student debt has a funny way of grounding most university graduates before they even get to fly. After all, it’s quite a daunting prospect having to leap from the nest of tertiary education into the wide open world of financial self-sufficiency with a $30,000 debt shackled to your newly fledged wings of professional independence. For those about to embark upon their educational odyssey the bad news is that there’s no getting past the exorbitant costs of a first class education. The good news is that uni debt is manageable provided you take advantage of the cheap borrowing opportunities a good student banking package can provide. When it comes to choosing which student banking package to go for it’s all about the overdraft.
Borrow at no charge
Having the option to borrow without having to pay interest is a benefit that any cash strapped student can appreciate. There are bound to be times throughout your time at uni when living as frugally as a Buddhist monk simply won’t be enough and some unforeseen circumstance will drop out of the blue and break your piggy bank. In times like this it’s comforting to know that you can reach into your overdraft without having to worry about being slapped silly with bank charges.
Biggest is always best
When choosing which banking package to go for always opt for the one with the biggest guaranteed interest-free overdraft. Guaranteed is gold because it means there are no strings attached. The amount offered is the amount you can borrow, no questions asked. The best student account packages offered by New Zealand banks provide interest free overdrafts of between $1,000 and $2,000 in the first year of study and a higher limit in subsequent years.
Don’t go over the limit
Dipping your hand deeper into the interest free cookie jar than you’re allowed is a very bad idea. Banks don’t give cautionary slaps on the wrist for failing to follow protocol; they hit you where it hurts most – your bank account. You will be looking to pay penalties as high as 30% interest on what you borrow should you stray over the red line. So, if at any time you do need to go over the stipulated limit your best move is to get a hold of your bank and make them aware of your situation. They will be able to advise you on how to deal with your finances at that point.
Make your money work for you
If you are lucky enough to have the spending self-discipline of a Jedi master and can’t foresee a future in which you will have to descend into the red sea of debt by borrowing, it’s still a smart move to take the overdraft. By taking some of your interest free overdraft out and using it to bulk up your savings account you will be able to earn interest on it. Okay, so you won’t exactly be raking in the big bucks but it’s still not a bad return and having a little more money lining your pockets at the end of the month is never a bad thing.
A word to the wise
Aside from the interest free overdraft, most banks entice students through their doors by dangling a host of freebies in front of them. It’s always cool to get your hands on a bunch of free stuff but it should never be the driving force behind your decision on which bank to go with. If you are going to go in for a package with perks then choose the ones that will be most useful. Incentives like paying no base, EFTPOS or ATM fees and a debit card without a fee for the first few years of study is another essential. And lastly, it’s always best to go for a student banking package that offers internet and mobile banking services because the last thing you want to have to do every time you manage your finances is trek off campus and into town.
Toby Adams is a professional copywriter based in Auckland, New Zealand, who enjoys writing about a wide variety of topics including travel, finance, health, education and much more.