AS MORE than 50,000 school leavers decide whether to accept a place at college, banks are scrambling to sign them up as customers.
Student banking is big business. While they may be penniless now, undergraduates will be potential for lucrative products such as credit cards, mortgages, investments and pensions when they start working.
Banks that attract customers as students have a good chance of holding on to them for life. Less than 1% of current account customers switched in 2013, according to the Central Bank.
What’s on offer?
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All five current account providers — AIB, Bank of Ireland, Ulster Bank, Permanent TSB and KBC Bank — offer free banking to students.
Some throw in free extras: KBC has a fly-or-cash deal giving new student customers the choice of €100 cash or two return flights to nine European cities. The offer is conditional on regular debit card usage and there are no guarantees of getting flights to the destination you want at the time you want.
AIB gives students a Leap Card worth €12, which has discounts on public transport and at a range of retailers.
Bank of Ireland has a rewards scheme for students.
Any interest?
Banks do not pay interest on credit balances in regular current accounts, and the same is true for most student customers. The only exception is KBC, which pays a token 0.01% on student credit balances.
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What about overdrafts?
AIB and Ulster Bank are the only lenders to give students preferential interest rates on overdrafts.
AIB allows first-and second-year students to apply for an interest-free overdraft of up to €1,000. Third and fourth years can access a €1,500 interest-free credit line.
Ulster Bank’s overdraft limit is up to €1,500 and is interest-and fee-free.
Can I get a credit card?
AIB, Bank of Ireland and Ulster Bank have lower credit limits for students compared with other customers.
First- and second-year student customers of Bank of
Ireland get a credit limit of €400, increasing to €850 for students in the third year and above. The bank charges 18.1% interest on purchases.
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AIB gives a limit of up to €600 and charges 20.1% interest on purchases.
Ulster Bank has a limit of €450 and charges 17.9% on purchases.
I need a loan
Bank of Ireland offers undergraduates interest-free loans of up to €1,500 as well as standard student loans of up to €10,000, repayable over five years at an interest rate of 9.7%. AIB loans students up to €50,000 over five years at 10.33% interest. You may get a lower interest rate if your parents guarantee the loan.
Credit unions may offer cheaper dedicated student loans, with rates from 4%, according to the Irish League of Credit Unions.
Top Tip
Students using credit cards, overdrafts or loans for the first time must not damage their credit record by missing repayments or defaulting on a debt, advises the Competition and Consumer Protection Commission. “A bad credit record may mean that you will be refused credit in the future,” the commission said.