With the average English graduate leaving university with £44,000 of debt, it is more important than ever to manage your finance properly whilst at University to avoid any additional debt.

Why is it important to keep an eye on your finances?

Firstly, your credit score is impacted positively and negatively by what you do today, and it will become very important to you sooner than you might think.  Your ability to apply for a loan, or any credit, will depend on your credit history. This means your credit score is going to impact your ability to get credit contracts for your phone, internet, some utility products, for getting a loan, a mortgage or even getting accepted as a tenant if you want to rent.

So it is really important that, even as a student, you manage your finances as best you can so as not to get in to unnecessary amounts of debt.

Common ways that students end up in unexpected debt are often;

  1. Using their overdraft on credit cards
    and bank accounts,
  2. Using up their student loan,
  3. Not paying their utility bills on time,
  4. Loosing their deposit on their shared house,
  5. Using high interest services like payday loans to try and manage their bills,

Here are a few tips to help you manage your money while at University.


1. Student Overdrafts

Having a student bank account makes a big difference for those who often use their overdraft. Many bank accounts offer students an overdraft limit of somewhere between £1,000 – £3,000 depending on your credit rating. Additionally, you won’t have to pay any interest on what you have borrowed whilst studying, although you will have to pay it back according to the terms of your account. Whereas a regular bank account will charge you a daily fee, plus interest, which is deducted monthly.

Once you graduate your student account will be converted to a graduate account, which will normally still include a 0% overdraft for 3 years but this will decrease each year, so make sure to check what your regular repayment conditions are to avoid any sudden fees. Make sure to look around for the best graduate account; do not assume it will have the best rate once you’ve graduated.

2. Credit Cards and Store Cards

When used correctly, credit cards can help build your credit rating, which is helpful when applying for loans later on, however, only apply for one if you are sure that you will be able to keep up with payments as it can ruin your credit history much faster than it can help. An option is to get a 0% credit card that allows you to borrow money with no interest for up to 18 months.

Store cards should strongly be avoided as they encourage you to shop when you do not have the budget for it. Many stores try to lure you by using loyalty and reward schemes, discounts, promotions, and special offers to existing cardholders. Beware stores like Argos, IKEA, Topshop and Selfridges who charge an average of 24.3% interest, which is significantly higher than an actual credit card. If you want the discounts without the debt, the best advice is to pay for your purchases immediately, and then bin the card.

3. Payday Loans

Payday loans are short-term loans that can be approved to almost anyone. With APR’s (Annual Percentage Rates) reaching well into the 1,000% range, and repayment expected to start as soon as a few days after you take the loan, they should be avoided. The credit offered is very expensive, and it can be difficult to keep up with payments if you start to fall behind, especially if you are a student and have irregular income. Many payday loan providers have developed very negative reputations because of the reporting dubious business practices they have used to attract customers. For example, Peachy Loans had complaints upheld against them by the ASA for advertising sandwich wrappers at coffee shops opposite to university campuses.

If you do find yourself in an extreme situation where you are considering payday loans, then research hardship funds, which are offered by universities for students in serious financial circumstances.

4. Missing Payments

Students often find it difficult to track regular payments in and out of their account, such as their credit card payments, mobile phone tariff, or utility bills. However, failing to pay a bill can have serious negative consequences on your credit history. This gets especially important if you are issued a County Court Summons.

Failing to pay an energy bill, or water bill, at your student house, could result in your supplier issuing you with late payment notices and a negative impact on your credit score. So, even if you live in a shared house it is important to make sure that you shared bills are regularly paid on time and that you do not negatively impact your financial history because you accidentally missed a utility bill payments.

Huru provides a service to set up and manage all of your student homes shared bills for you. So by using Huru, you will never need to worry about making sure that your bills are paid on time or that you are on outrageously expensive tariffs again. Huru takes care of all of that for you. The old way of sharing bills in  a student house, where one housemate put all the bills in their name and then got their housemates to pay them back each month, can also cause financial management problems each month if one housemate has to pay the bills upfront. By using a service like Huru, the bill is automatically split equally between housemates, so not one housemate needs to pay a large single upfront cost for all the bills each month.

Also published on Medium.