Updated: Aug 23
Understanding the Basics of Banking and Finance
When FromHighSchooltoUni recently asked one of our Members if she thought any topic was missing from our Member Resources collection, she told me that her son had initially been confused by all the banking terms and jargon when he opened a student bank account, and it would be helpful to provide a glossary of banking terms.
As a student, you may be overwhelmed by the myriad of banking terms and jargon that you encounter on a regular basis. Whether you are opening a student bank account, applying for a debit card or credit card, or managing your budget, you need to understand the basic concepts and features of banking services. In this article, FromHighSchooltoUni will explain some of the most common banking terms every student should know, and give you some tips on how to choose the best bank for your needs.
A Guide to Opening a Student Bank Account
Opening a student bank account and deciding with which bank you are opening your account, and the bank cards you will need, is one of the most important things you will do as a student. Along with setting up a budget, it is one of the first decisions you will have to make.
When deciding on which bank to open an account with, research your options. Do not settle for the first one you see. Each bank will have different terms and conditions and a selection of ‘freebies’ to attract students, such as discounts in shops, a free or discounted transport card, a start-up contribution to your account, or a free overdraft facility. Focus on what each bank is offering you and ask yourself whether or not you would benefit from it. Ask other students who they bank with and whether they are happy with the service they receive, whether there are any hidden charges, etc.
It's also important to check if their offers are only for nationals/permanent residents or also for international students, as you may not have the same conditions.
How to choose the right bank card for your needs
Take the time to research what you will need: debit card vs credit cards. Read and understand their features, the small print and the potential fees involved. Ask the bank to explain in-depth to you if you do not understand at first. It may seem like they are throwing money at you!
A general rule of thumb is that if it sounds too good to be true - there is generally a catch – be wary and do your research!
The most common banking terms and what they mean
Automated Teller Machine - the 'hole in the wall' in front of banks to withdraw cash. Be wary though not to use your debit card from one bank in the ATM of another bank, as you may be charged a transaction fee. In addition, if you use your credit card to withdraw cash, you will be charged either a percentage of the amount you withdrew, or a fixed transaction fee (this can make your withdrawal expensive!).
A credit card is a means of making a payment transaction, but you are ‘borrowing’ the money as the credit card company pays the merchant on your behalf, and then sends you an accumulated invoice of all transactions made, to be paid at the end of the month. Unless you are able to keep a running total of your transactions and know that you will be able to pay it all off at the end of the month, you should be cautious using this option. You can quickly rack up debts that you are unable to pay off immediately which will give you a negative credit score, which has consequences.
A debit card is a payment card linked to your bank account. When you use a debit card to make a purchase, the money is deducted from your account balance immediately. Unlike a credit card, which allows you to borrow money that you have to pay back with interest, a debit card only allows you to spend the money you have in your account. Debit cards can be used to make purchases in stores or online, to withdraw cash from ATMs, and to make payments to merchants who accept card payments. Some debit cards may also offer rewards or cash back on purchases. It is important to keep track of your debit card transactions and account balance to avoid overdrawing your account, which can result in fees or other charges.
A prepaid card is a payment card that allows you to load money onto it in advance. It works like a debit card, but you can only spend the amount you have loaded onto the card. This can be a useful tool for students who want to budget their spending, or for those who do not yet have a credit card. With a prepaid card, you can use it to make purchases in shops or online, or to withdraw cash from an ATM.
A withdrawal is a transaction that involves taking money out of your account. This can be done in a number of ways, including visiting a bank branch and requesting a withdrawal, using an ATM to withdraw cash, or making a withdrawal online or through mobile banking. Withdrawals can be made from a current or savings account and the amount that can be withdrawn may depend on factors such as your account balance, any withdrawal limits and the available funds in the account. It is important to keep track of your withdrawals to ensure that you do not exceed any applicable limits or incur fees.
Want more tips on banking for students? For a complete list of banking terms and definitions, FromHighSchooltoUni has a full Student Guide to Banking Terms on our website. Don’t have a Membership yet? Click on the button below to access our complete library of resources specifically designed to help students prepare, survive and thrive at university. FromHighSchooltoUni membership is a one-time low-cost fee that gives you lifetime access to all our checklists and student guides.
Heading off to university this year?
We have a whole chapter on banking and budgeting in our book FromHighSchooltoUni, and this was just a little snippet. Did you find it useful?
Below are links to our other FromHighSchooltoUni books created for high school and university students to help them navigate the transition to university and settle in quickly and stress-free.
Easy Meals for Uni Students with Zero Cooking Skills (Kindle edition - Free with Kindle Unlimited membership).
Downloadable version included in the Member Resources subscription.
Easy Desserts for Uni Students with Zero Cooking Skills (Kindle edition - Free with Kindle Unlimited membership).
Downloadable version included in the Member Resources subscription.
This is a great gift to order for young students as a Christmas stocking filler!
Good luck with your move to university! Don't forget to visit our FromHighSchooltoUni website and download all our packing lists, accommodation guides, student budget calculators as well as our Free Resources to help you settle in stress-free!
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