Tuesday 20 March 2018

From free flights to Leap card vouchers banks battle hard to get students to sign up

'Free flights, cash and Leap Card vouchers are among the freebies on offer'

New York City
New York City
College is an expensive time for students - and parents.
Charlie Weston

Charlie Weston

IT is open season on students, as far as banks are concerned.

And parents and their college-going offspring would be wise to be sceptical as banks try to lure in new customers with gimmicks and low-cost lending deals.

Free flights, cash and Leap Card vouchers are among the freebies on offer as banks battle hard to get students to sign up with them.

They know that if they get students as customers there is a strong likelihood they will have them as customers for life.

Such is our irrational loyalty, that we are more likely to get divorced than switch to another bank.

Along with the freebies, also on offer are free banking, commission-free foreign exchange and mobile banking as part of the student packages being pushed hard by the likes of AIB, Bank of Ireland, Ulster Bank, Permanent TSB and KBC Bank.

But the problem with easy credit and freebies is that the loans have to be repaid. And if they are not repaid by a certain point the cost can go up considerably.

Ulster Bank's current account has a facility giving students emergency cash.

Students who open an account with the bank can withdraw up to €300 via an ATM using a code if their debit card is lost or stolen.

It does not take a genius to realise that where students and cash are concerned there is always an emergency.

Permanent TSB has a similar service allowing withdrawals of up to €100.

But it is with their lending products that banks do their damnedest to reel in the students.

The risks here are obvious - students have a good chance of leaving college with a degree and a big fat debt.

Banks have even joined forces with colleges to offer loans to pay the likes of the student registration fee, which is set to be an eye-watering €3,000 this year.

Banks are offering interest-free loans. Most of the banks offer these, although there is usually a limit of €1,500.

Bank of Ireland offers such a facility. You can defer the first three months of repayments.

But you need to repay the debt within a year if you want to avoid an annualised interest rate of 12pc.

Parents are required to guarantee this loan.

AIB has a similar deal. It offers an interest-free overdraft on student current accounts.

There is a limit of €1,000 for first and second-year students.

For third and fourth-year students the limit rises to €1,500.

The rate of 11.85pc applies to overdrafts in excess of €1,500.

Again there is a need for a guarantee from a parent or guardian.

Credit cards are another area where banks are seemingly generous to students.

AIB is offering €30 credit to new student credit card accounts. This is enough to cover the €30 government levy on credit cards.

The sheer cost of third-level education means that more students and their parents are taking out loans to cover the costs.

A recent survey commissioned by the Irish League of Credit Unions found that the average monthly costs come to €475 a month for those students living at home.

For students living away from home, the monthly costs come in at €1,033, the survey found.

Students and their parents would be wise to remember that it is easy for a college-goer to come by credit, but it will be a hell of a lot more difficult to repay it.

And if you have repayment difficulties in your student years, it could follow you into your career and affect your credit rating, making it difficult to get a car loan or a mortgage.

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