Benefits and pitfalls of overdrafts for Aussies with student accounts

Aussies preparing to go to university may want to spend some time thinking about which student accounts are best suited to their needs.

Having an overdraft can be vital for some who need to be able to borrow money while they focus attention on their studies.

The ability to get a large overdraft could enable people to manage their student banking more effectively, as it might offer them some welcome breathing space when their savings start to run low.

No collateral is needed to borrow money in this way and interest is only charged on the amount borrowed.

However, Aussies may want to take care to only use this option when absolutely necessary, as the interest paid could be put to other uses, for example rent and buying books.

Those who decide to apply for a personal overdraft may want to compare student bank accounts to establish which will charge the lowest interest rates and which will allow them to borrow the most.

Earlier this year, changes to tax rules announced by the Australian Tax Office revealed that up to 45,000 university attendees could receive a boost to their coffers through a tax deduction of $550, the Sunday Telegraph reported.

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