Years abroad cost a bomb. A small fortune. It’s not something to take on lightly. However, as I get ever closer to departing for sunny California on the 19th of September, one of the last chores I needed to see to was arranging a bank account and my financial situation. After days of research and bank appointments, I’ve satisfactorily resolved the situation, and just wanted to pass on the information to anyone else about to go on/considering a year abroad.
- As with many UK students, my current debit card is with Natwest, as it has a decent (expandable) overdraft, AND if you meet certain conditions, you receive a student railcard which roughly reduces the cost of travel by train by a third. They’re probably one of the best, student-orientated banks.
- To get these benefits, you have to make 3 transactions per month, and deposit £750 every 6 months. The latter of these conditions will probably be met by having your student loan directly transferred into it (this is important to remember later on).
- HOWEVER, when you use your student account debit card abroad, you will be subject to the foreign transaction charges (here’s a link to the info). Essentially, every time you use the card to withdraw cash you will lose between £2-5, and each time you make a purchase at the point of sale, you will lose £1.25. I hate losing money I haven’t actually spent…
- Therefore, I was in a difficult situation as I still wanted the benefits of the Natwest student account, but I didn’t want to lose money just for withdrawing money from a bank or cash machine. Luckily, there was a solution.
I stumbled on The Solution by accident. It was actually posted to my Dad, and came in the form of Norwich and Peterborough Building Society peddling their new current account to him. They must be trying to attract new customers, and are capitalising on:
a) The current distrust of banks as opposed to building societies *Cough* Barclays *Cough*
b) The holiday season
Essentially, they are offering an award-winning “Gold Classic” current account, which MAKES NO FOREIGN TRANSACTION CHARGES ABROAD. Here’s a link to their page. Now, in order to earn the debit card use free of charge abroad, again you have to meet certain conditions. There are two ways to get this:
- Deposit at least £500 per month (potentially a bit of an ask for a student, but it does give you card/keys cover with Sentinel Gold, always handy, especially abroad)
- Make at least 6 transactions per month (easy peasy if you are lazy like me and use your card more than cash)
Some of you, if you are interested in this for your own year abroad, might be concerned that you would not be able to make it to a Norwich branch of this building society in order to apply. However, you need not be concerned, as you can apply online! Hip-hip-hooray for technology!
A small problem
However, there was a glaring flaw in my plan… losing the student benefits with Natwest. I couldn’t be bothered with the hassle of closing down the student account, losing my lovely railcard, only to open another one for my final year at Warwick come July 14th when my year abroad officially ends. However, there was another solution…
Solution Mk. II
Before I go any further, this second solution does require a bit of cooperation by a parent/ family member/ trusted friend or significant other. But with any financial matters on a year abroad, this is always going to be the case. For instance, in my personal case, I can foresee some serious across-the-Pond Skype sessions! But anyway, here’s the second solution I came across:
- Keep your Natwest Student Account open and keep it as the account your student loan gets deposited into. Leave the card and details (account number, sort code, and PIN- bear with me before you gasp in horror, you can always change the PIN when you return home) with a trusted person back home. This will satisfy the deposit condition for the student benefits of the Natwest account.
- When the loan goes in, transfer the money from the Natwest account to the Norwich and Peterborough Gold Classic Current Account. This has the HUGE benefit of being a UK to UK transfer, and will thus incur no transfer charges. Each transfer will count as a transaction, and so you could get you trusted person to split the loan into smaller amounts, in order to satisfy the transfer conditions of both accounts.
- If you’re struggling to meet the 6 transactions per month on the Natwest side of things, this shouldn’t be too much of a problem. You can get your UK contact to make a couple of small purchases, and just deposit their own money in- could be as small as you like, it all still counts!
- Using online bank transfers, which you or the person back home can make, the money goes from the Natwest account where it’s fed to you by the Student Loan Company, into the Norwich and Peterborough account. You have the N & P debit card with you abroad, and hey-presto: you have minimised the transfer fees AND maintained your student account, ready to use when you get back from your year abroad!
- If you’re not with Natwest… I guess this might seem slightly irrelevant. However, I think most standard current accounts will have transfer charges abroad, so it’s still something to consider if you are heading abroad.
- Some advice I received from a financially-minded friend was to just open an account in a local bank in the States. However, and this is a bit specific to my own case and people going to the States, but the US banking system tends to be more demanding in terms of wanting to see some form of credit history when contemplating new customers. As someone who’s never had bills, a mortgage or any loans (or bankruptcies, thank goodness…) I was concerned that I might be refused solely on the grounds that I didn’t have an adequate credit score… not because in debt up to the eyeballs or whatever, just because I haven’t significantly entered the world of serious financial commitment. Though some might say acquiring a student loan is, in and of itself, a serious commitment… but sadly that just doesn’t count when having a credit history established… until you start paying it off perhaps.
So, all in all, I am pretty pleased with how my financial preparation for my year abroad has gone!One more job ticked off the list, and another step closer to that beach campus in Isla Vista… let the good times roll.