We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies. You can understand more and change your cookies preferences here.


When you click on a retailer link on our site, we may earn affiliate commission to help fund our not-for-profit mission.Find out more.

6 Oct 2019

9 money mistakes to avoid as a student

Find out how to dodge scams, pay off your overdraft and build your credit profile

More than half of students believe they don't have enough money to live on at university, according to a survey from KnowYourMoney.

Yet while funds tend to be tight as a student, there are steps you can take to make your money go further. As your settle into your first semester, it's a great time to re-assess your budget and make a plan for the year ahead.

Whether you're finishing up freshers' week or knuckling down for your final year, our tips will help you manage your finances as a student.

Be more money savvy

Get a firmer grip on your finances with the expert tips in our Money newsletter – it's free weekly.

Email address (required)

This newsletter delivers free money-related content, along with other information about Which? Group products and services. Unsubscribe whenever you want. Your data will be processed in accordance with our Privacy policy

1. Not being scam-aware

HMRC has warned that students starting university this year could be targeted by a fresh wave of tax scams.

The tax body received thousands of reports of scammers targeting students last year, and 620,000 reports of tax-related email scams in total.

On top of this, a recent Lloyds survey found that more than half of current and former students were scammed at university, with victims losing an average of £420.

Scammers often send out fake tax refunds, or offers of bogus grants, sometimes from email addresses that look legitimate (such as with the '.ac.uk' ending), asking students for bank details and other personal information.

If you receive unsolicited emails asking for personal details that appear to be from HMRC, your bank, or any other organisation, treat them with caution, and don't click on any links.

Even if an email does seem legitimate, get in touch with the company via social media, or the 'contact us' page on their website, rather than replying to it directly.

2. Paying council tax

Students are exempt from council tax. But if you live in private rented accommodation, you might still get a bill from your local authority if you don't let them know you're in full-time education.

The way to do this can differ between councils and universities. Sometimes you'll have to call your council directly and give them the details of your student status.

Alternatively, you might be able to fill out a form on your university website, or you might have to write and send a letter.

You can find out how to contact your local council using this government webpage.

3. Overspending your overdraft

Most high street banks offer student bank accounts with a number of perks, interest-free overdrafts that last until you graduate.

This means you can overspend from your account up to a certain limit (generally no more than £3,000) without incurring any extra charges.

However, all good things come to an end, including interest-free periods.

At the end of your course, most banks will convert your student account into a graduate account, which will often give you one additional year before your overdraft starts attracting interest charges.

You need to have a plan for paying your overdraft back before that year is up.

If you're in your final year, and your overdraft is quite large, follow the tips in our guide to clearing your student overdraft for help making it more manageable.

Keep in mind, also, that the way you would be charged for overspending your overdraft will be changing over the next year due to new regulations, so keep an eye out for information from your bank.

4. Ignoring bank account freebies

When choosing a bank account, the most important factors are likely to be the interest rates, overdraft terms and customer service you'll receive.

However, keep in mind that you can also get freebies or bonuses from opening certain student bank accounts.

Santander, for example, offers a four-year 16-25 railcard when you open an account, while HSBC offers a £100 sign-up bonus and a 12-month British Cycling Fan Membership.

For a full breakdown of what different banks can offer, read our guide to the best student bank accounts.

5. Missing out on discounts

As a student, you're entitled to a huge number of discounts, the likes of which you're not likely to see again until you're a pensioner.

Most places will accept your university ID card to qualify or student discounts, but there are a number of other cards that could get you more deals.

  • Totum:formerly the NUS extra card. This offers over 200 discounts on big and small brands, and costs £12 for a year, £22 for two years or £32 for three years. It also comes with a free one-year International Student Identity Card (ISIC).
  • International Student Identity Card (ISIC):this card gives you access to tens of thousands of discounts in over 130 countries. It costs £12 for a digital version and £15 for physical.
  • Unidays:this is an app, not a card. It's free, and gives anyone in education over 16 access to more discounts.
  • Student Beans: this is another free discount app.

Since Student Beans and Unidays are both free, you have nothing to lose by trying them out.

With the others, take a look at the discounts they offer, and whether you're likely to get your money's worth, before you sign up.

6. Paying full price for travel

If you're between the ages of 16 and 25, you'll pay one third less on train journeys with National Rail's 16-25 Railcard.

It costs £30 for one year or £70 for three years (a £20 saving). Unlike other railcards, you can use it during peak times, though restrictions do apply.

You can also get discounts on other methods of transport. Student Beans is currently offering 10% National Express coaches. Meanwhile, Transport for London's 18+ Student Oyster photocard will give you 30% off travelcards, bus and tram tickets.

7. Forgetting about your credit file

At some point in the future, you might want to apply for a credit card, a loan, or a mortgage. This can be more difficult if you have what's called a 'thin' credit file - meaning you don't have a track record of borrowing, good or bad.

Your student loan won't show up on your credit report, so you don't need to worry about that.

There are a couple of small things you can do right away to start building a strong credit profile:

  • Join the electoral role:registering to vote is the easiest way to boost your credit rating. You can do it here and make sure you update it when you move.
  • Check your credit report: by looking at your report, you can check if the details are accurate. If they're not, you can request a correction.
  • Remove your name from old financial associations:if you've ever had a joint account with an ex-partner or housemate, and you no longer need it, remove that financial association from your credit report.

There are also some longer-term methods that can help, such as:

  • Paying your bills on time: including phone bills, utility bills and rent. Being the account holder for a phone contract or utility bill can help build up your credit over time - just make sure you pay on time every month. If you're in a shared household, take responsibility for paying any bills in your name yourself, so that your score isn't at risk if your housemate forgets.
  • Avoiding payday loans: payday loans are extortionately expensive, and having one show up on your credit report can put a dent in your score.

You could also apply for a student credit card, but that comes with risks.

8. Relying on student credit cards

As well as student bank accounts, there are a number of credit cards geared towards students.

These might be interest-free when you first take them out, but will start charging interest eventually. Many of these cards come with hefty APRs if you don't pay off your balance in full.

While spending a little on a credit card and clearing the balance every month can help with building your credit history, it's dangerous to rely heavily on credit card spending, especially when you have limited income as a student. Debts can quickly mount up, especially if you're being charged interest month after month.

9. Not sticking to a budget

It's probably the last thing on your mind when you're starting your first term, but budgeting can help you stretch your money throughout the academic year.

First up, identify how much money you have each month, taking into account your student loan, scholarships and any other available funds.

Then work out how much you'll need for essentials like housing, food, study materials and other non-negotiables. Don't forget to put aside funds for big one-off expenses as well.

The money you have left is how much you have to spend each month - so if you find yourself getting close to the limit, consider cutting back.

Find out more:50 ways to save money