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Coppers gives you the lowdown on the best ways to save and splurge. By Emma Bigg

D

espite the reputation of alcohol abuse and wild lifestyles that students have acquired over the past decade, it will surprise some that it is the financial situation they find themselves in that dominates their thoughts. A recent survey by independent university guide Push estimates that undergraduates beginning their courses this year can expect to owe a huge £23,000 by the time they graduate. Looking at this figure, it is no wonder that nearly a quarter of students have high levels of concern when it comes to their level of debt.

and what year of study you are in but the largest overdraft on the market at this time is with Halifax. Their Student Current Account can provide you with an overdraft of up to £3000 depending on your situation. Other great student account can be found with Barclays and NatWest. While an interest free overdraft is all fine and dandy while you are studying, there will come a time where you will be charged interest on it.

can all help to build a solid foundation for when you leave education because; believe it or not, you will not want to still be living with your parents when you are 26. And they probably wont take too kindly to it either. So we have put together a guide of options that are available to you, giving you the pros and cons of each so you can make an informed decision on what happens to your money.

TRY AND AVOID CREDIT CARDS IF POSSIBLE

All is not lost however, as Coppers is here to give you hints, tips and advice on managing your money. This week we are sorting the wheat from the chaff when it comes to savings accounts, investments and current accounts. All the jargon is translated into plain and simple English and we have scoured the country’s financial institutions in search of the best deals so at least YOU wont be caught out in the recession. Even if you remember nothing else from this magazine, take this away with you: a student current account is a MUST HAVE. Not only do some of them come with rather useful free gifts such as iPods and Railcards but they also come with a interest free overdraft; helpful for those more, shall we say, unexpected costs. An interest free overdraft means that you wont get landed with a huge additional charge if you do not pay it off in the allotted time. The overdraft limit you are given all depends on which bank you are with

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It is very important that Instant Access Savings Accounts you keep on top of your Instant access savings accounts are finances and ensure that perfect if you want to reach your money you are able to pay off easily and immediately, which is important the overdraft and get back in the black for students. However, the interest rates before you graduate. Another quick piece that come with these accounts do not of advice is to try and avoid credit cards if tend to be particularly high and those possible. They are difficult to keep track of with high interest rates usually have if you are new to budgeting and managing restrictions. It is also a good idea to money and come with hefty interest rates change savings that can ruin your credit rating if you do not pay soon enough. This is a domino effect and can prevent you from getting a mortgage, loan and even a job when you are older. Halifax Web Saver Extra. 2.8% gross.

Our Top 3 Savings Accounts

While we are sure that you are used to looking at your finances and planning from one week to the next, it is a good idea to look further into the future too. As horrifying as it may seem to a student with already limited funds, saving for a rainy day (as the parents would say – sorry!) is one of the best things you can do. Money from birthdays and Christmases as well as a little each month if you have a job

1 withdrawal allowed per year but if you continue to withdraw you lose 30 days interest on the amount you withdraw. Santander Instant Access Saver. 2.5% gross. If the balance in the account drops below £1000 you will only receive an interest rate of 0.1%. But there is a bonus of 1.5% for the first 12 months. Post Office Instant Saver. 2.1% gross. 6 free withdrawals per year and a charge of £1 per withdrawal thereafter. However, there is a 2% bonus for the first 12 months.

Not accounts regularly because the majority of banks and building societies will only give you a high rate of interest in the first year you save with them. ISAs and Bonds An ISA, short for Individual Savings Account gives you the opportunity to save without having to pay tax. Of course, if you’re a full time student you don’t have to pay tax on any interest you get but it is a good idea to consider an ISA if you have a bit more money to put away and also for when you leave education and start paying tax on just about everything. There is a limit to the amount you can put in an ISA each - £3600 and depending on the ISA you choose; there can be similar penalties to the instant access accounts for multiple withdrawals. We recommend Barclays Golden ISA, which gives you a gross interest figure of 2.55%. Bonds are long-term investments where

Coppers

To Save? you leave your money for an amount of and many of the interest rates within the time that can range from 6 months to 5 bonds are tiered, meaning that the more years. Because bonds tend to be for a money you invest, the larger your return. fixed amount of time and have a large number of restrictions, you receive larger amounts of interest. The idea is that you invest your money into a bond and leave it there without touching it and you Post Office Growth Bond. 3.3%. One Year. get a larger return than you would do for a normal Invest from £500 to £1million savings account.

Our Top 3 Bonds

Nationwide Fixed Rate ISA Bond. 2.75%.

However, bonds aren’t One Year. for everyone and you Invest from £3000 upwards should think carefully about whether you Santander Fixed Rate Savings Bond. 2.5-3%. can tie up your money One Year. for a fixed term without Receive 2.5% on investments from £1 to needing access to it. £9999 and 3% on investments from £10,000 The best way to start is upwards with a six-month or one year fixed rate bond. Bonds are a perfect way to save if you receive a large amount of money or an inheritance

Copper’s Financial Jargon Buster Ever helpful, we have put together a mini guide to what means what in finance... AER – also known as Annual Equivalent Rate. Where interest is paid annually the quoted rate and the AER are the same.

Investment Term – sometimes just known as ‘term’. The period of time for which the investment is designed to be held.

Net Interest – the rate of interest payable after the deduction of UK Income Tax (currently 20%).

Gross Interest – the taxable rate of interest without the deduction of UK Income Tax.

ISAs – ‘Individual Savings Accounts’ are tax-free savings accounts.

Tax Free – the interest is exempt from UK Income Tax and Capital Gains Tax.

Issue/Series – fixed rate products are sold in Issues or Series, each with its own guaranteed interest rate(s) and new Issues or Series are brought out whenever the fixed rate changes.

Variable Rate Products – savings and investments where the rate of interest can be changed by the bank or building society from time to time.

Fixed Rate Products – savings and investments where the rate of interest is guaranteed for a specified period of time.

17 22/04/2011 21:09


Personal Finance