Student Bank Accounts

Student Bank Accounts

student account
As their name implies, student banks accounts are accounts which are tailored to suit the needs of those in further education. These types of accounts have a number of advantages for students over regular bank accounts. To begin with, one of the most attractive features of student banks accounts is that they offer interest-free overdrafts which can range anywhere from £1,500 to £3,000. In addition, banks and building societies which have student bank accounts offer a number of incentives to appeal to students. Popular incentives include discount train travel and insurance.

How to Pick the Best Student Account

Although it may be tempting just to open up an account with your nearest bank, it is better in the long run to do your research.

To begin with, one of the most important things to take into account is which account offers the largest 0% overdraft. This will allow you to borrow money for free from the bank should you spend more money than what you have in the bank. Make sure the overdraft is guaranteed as some banks sneakily put ‘up to’ amounts in the marketing which can make it difficult to compare overdraft limits.

Remember to never go over your overdraft limit. This isn't a rule just for students, it's a rule for life. The game totally changes if you go beyond your overdraft limit – charges shoot up and you can be caught in a vicious cycle that's tough to ever escape from. If you stay within your limit there's usually NO COST.

If you're struggling, at least talk to the bank. Try to agree an extension but remember, you are likely to be charged interest, up to a huge 24% EAR. It's always far better to plan and budget to avoid this.

If not, or if you go over without permission, the charges can be enormous – up to £15 per transaction (so a shopping trip spending £30 in five debit card transactions could see you facing £75 of charges) – beware!

Look out for the best incentives. Some bank accounts offer excellent freebies to student account holders, such as train travel discount cards and insurance discounts.

Be wary of any terms and conditions. Some banks require students to pay in a set amount of money each term. Make sure that you are able to commit to these terms and conditions.

See how long the account last for. While the benefits of some student accounts expire upon graduation, some student accounts offer 0% interest overdrafts for at least a year after graduation.

In short, when comparing student bank accounts, you should take into account the following:

  • Amount of interest-free overdraft
  • Charges if you exceed your overdraft
  • Incentives
  • Terms and conditions

Top 2017 Student Account Providers

To make you decision easier, the table below takes a look at the student accounts being offered by top banks and building societies throughout the UK.

Provider Maximum 0% Overdraft Incentives Unarranged Overdraft Charges
Santander £1,500 in years 1-3 then £1,800 in year 4 and £2,000 in year 5 4 Year Train Discount Card £5 daily charge (max 10/month), paid/unpaid fees: £5/£10 per item. Max monthly charge of £95
Barclays £1,000 in year 1, up to £2,000 in year 2, then up to £3,000 Sign up to its Blue Rewards scheme and for a £3/mth fee you can get at least £7/mth back 8.21%, £10 buffer and a grace period until 3.30pm to pay and avoid overdraft fees.
HSBC £1,000 in year 1, up to £2,000 in year 2, then up to £3,000 free £60 Amazon gift card and a year's Amazon Prime when you open the account by 31 October 2017. No fees
Nat West £2,000 Free four year National Express coachcard £8 per returned item
Lloyds £1,500 in years 1-3 then up to £3000 Free NUS Extra card each year for three years (worth £32) if you apply by 31 October 2017. No unarranged overdraft, but unpaid item fee of £8 per day (max one per day).