'Free banking' deals can cost students dear


STUDENTS ARE being warned to compare current account charges before signing up to banking deals.

The National Consumer Agency (NCA) has said while banks may offer “free banking” to students, interest and penalties on overdrafts and other items can be substantial. The agency is urging students to compare the deals marketed at them, checking charges before opening an account.

“Although all banks offer free banking for students, all student accounts carry charges if you don’t have enough money in your account to meet direct debits or other payments,” said Ann Fitzgerald, chief executive of the NCA.

“Students need to compare all options available to them before they choose an account and not just pick the account with the best incentive,” she said. In a comparison of student current accounts offered by four Irish banks, the NCA found interest charged on student overdrafts varied from 0 per cent on AIB’s Student Plus and Ulster Bank’s student account, up to certain limits, to 11.9 per cent and 14.8 per cent respectively with Bank of Ireland and Permanent TSB.

In the case of an unauthorised overdraft, where a student exceeds their overdraft limit or does not have an overdraft, surcharged interest is highest with AIB and Permanent TSB, at 12 per cent, and lowest with Bank of Ireland, at 7.2 per cent.

Where a student writes a cheque or makes a direct debit for which there are insufficient funds, those with Bank of Ireland and Ulster Bank are penalised most with a charge of €12.70, while those with AIB and Permanent TSB are charged €10.

Warning students about such charges, Ann Fitzgerald said: “As most students are on a tight budget, having to pay an unexpected charge on their account of up to €12.70 could be more than they can afford.”

She said keeping track of your account was particularly important for those sharing accommodation who might have responsibility for a utilities direct debit.

Where a student customer lodges a cheque that bounces, Permanent TSB charges a penalty of €10, AIB €4.44 and Bank of Ireland €3.30, while there is no charge with Ulster Bank.

The NCA is advising those students taking out a loan to be extra cautious about its term and their ability to repay it, as poor money management in college may affect their future borrowing ability.

“Be aware that if you miss repayments, or fail to clear a loan or credit card, it will show up on your credit history for five years after the loan is closed and this may affect your ability to get a loan in the future,” Ms Fitzgerald said.

She said with living costs amounting to up to €7,800, many students were on a tight budget.

Bank charge comparisons and budgeting advice for students are available on nca.ie.