Today, it pays off for young people to compare the conditions even for common products, because they often come across a better offer. A typical example is bank accounts. In the case of loans, the situation is not as carefree as advertised. When students want to borrow money and do not have their own income, they usually cannot do without someone vouching for it.
Student Accounts
At a time when many banks offer accounts without maintenance fees, student accounts are no longer the only ones offering this benefit, as was almost exclusively the case years ago. Therefore, it is worth comparing the offer of not only student but also current accounts offered by domestic banks. They may come across alternatives that will suit them better.
“Sometimes banks lure students to open a student account with financial motivation in the order of hundreds of crowns. It is definitely a good idea to check whether a person does not gradually pay such an amount in fees during normal use of the account, for example for withdrawals from ATMs of foreign banks or outgoing payments,” says Miroslav Škvára, a lecturer in financial literacy and an associate of Broker Trust.
“For example, when we compare student accounts in a financial literacy class at a grammar school, I often include a product that does not directly bear the name ‘student account’ and it often turns out that even a product without the label ‘student’ can stand up to the competition,” she adds.
Student Loans
Student loans are not very common in the Czech Republic. Most of the banks that provided these products in the past have withdrawn them from their offer. Currently, for example, Česká spořitelna or Komerční banka offer a student loan. In the first case, the interest rate is 8.9 percent, in the second 6.9 percent. For both loans, the total maturity can be up to ten years. It is also possible to postpone repayment. In this case, however, the debtor only postpones the repayment of the principal, he must continue to pay the interest. If students do not have sufficient income of their own, they need someone else to guarantee it.
“Not only students should handle loans very carefully so that they do not get into unnecessary debt at a time when they do not have their own regular income. The borrowed money should definitely not be directed to ephemeral benefits, but if anything, then to provide things or activities that will serve the student’s development and subsequent employment, such as student stays abroad,” adds Miroslav Škvára, according to whom investing in education pays off at any age.
Students can also use the option of a so-called overdraft or the use of a credit card for some bank accounts. As with loans, one should handle them very carefully. Although interest rates are usually lower for student credit cards and overdrafts than for current accounts, everyone should definitely try to pay off the debt before the end of the interest-free period.
Savings
From this year, minors can also save as part of supplementary pension savings. At the age of 18, they have the opportunity to withdraw up to a third of the money they have saved. However, they should take such a step only after careful consideration of what they want to spend the money on.
“One of the main advantages of saving for retirement is the long-term interest on the money invested. By collecting this money, one deprives oneself of this effect, and also loses the state contribution. Supplementary pension savings is a very specific product that has only been finding its place with minors since this year. The number of participants under the age of 18 who save in this way is already close to ten thousand. The advantage is that it is possible to change the amount of the contribution at each stage, and thus respond to the current life situation of a student, employee, or a person who is already thinking about their retirement age and is more aware of the need for savings,” says Miroslav Škvára.
Mortgages
This year, ČSOB began offering a so-called student mortgage on the Czech market. The bank offers clients an interest rate that is discounted by 0.2 percent, which is a value that can be commonly achieved in negotiations in banks today even without similar promotions. If students do not have sufficient income of their own, students also need a “co-debtor” to guarantee them in order to obtain a mortgage, most often this role will be fulfilled by their parents.
Smart apps
Today, modern technologies also help significantly with the management of personal finances. With the use of some finance-focused applications, every smartphone can become a smart wallet, thanks to which their owners will have a better overview of their own money. For students who are used to using smartphones on a daily basis, it is an ideal way to keep track of their own finances.
The article was published in several media