As you move on to higher education, choosing the best student bank account for your needs is an important step. While many people simply stick with the bank they have used as a child, moving to the student version of their existing current and savings accounts, it pays to compare what other accounts are available and the benefits they can offer.
Getting your finances in order is important if you are going to make sure you don't finish your studies with large debts that will take years to pay off. In this article we look at the features you should be looking for from your student bank account and compare some of the best currently available.
What is a student bank account?
A student bank account is a special account for those in higher education. Most will offer better overdraft and interest rates than regular accounts and can come with additional incentives, such as free railcards. However, you need to be aware that banks are not charitable institutions and they know that at the end of your education you will probably still have an outstanding overdraft debt and will, therefore, remain with that bank in the future.
The cost of studying is high and the use of an overdraft facility provides a useful safety net but make sure you also maximise your income by taking up some part-time work, particularly during the long holidays.
What do I need to open a student bank account?
To open a student bank account you will need proof of identification - typically a passport or driving licence - and proof of your address. In addition, you will need to show you are eligible for a student account with one of the following:
- A UCAS confirmation with an unconditional offer
- A letter showing a conditional offer and proof of A-level results that meet that requirement
- A confirmation letter from the university you will be attending
How to choose the best student account
- Overdraft facility: a fee-free overdraft is often the main attraction of a student bank account. Something to watch out for is whether the overdraft that is advertised is what you will actually be offered. Some will be "up to" a certain level, while other offer a guaranteed amount
- Perks and freebies: Some bank accounts will offer cash for signing up or a rail card for discounted travel. It's important to consider how these offers stack up against the other features of the account, particularly the overdraft facility. It's almost always better to opt for the account with preferential overdraft arrangements
- Ease of use: Gone are the days of being tied to a bank with a local branch. A key feature now for any current account is whether it offers good online banking and/or a banking app that allows you to manage your account remotely.
Which is the best student account?
Student banks accounts come with a wide range of overdraft facilities and benefits, understanding these will help you choose the right account for you.
Top 3 student bank accounts
|Santander||£1,500 fee-free overdraft in years 1-3||Free four-year 16-25 railcard|
|Nationwide||£1,000 fee-free overdraft year 1, £2000 in year 2, £3,000 in year 3||No extra benefits|
|HSBC||£1,000 fee-free overdraft year 1, £2000 in year 2, £3,000 in year 3||No extra benefits|
- Must be 18 or over and living in the UK permanently
- Studying or about to begin studying with a confirmed offer, an undergraduate course of at least 2 years in length or level 4 to 7 apprenticeship
- A fee-free arranged overdraft of £1,500 in years 1-3, £1,800 in year 4 and £2,000 if you stay on to year 5
- From 12 April 2021, no interest paid on the balance of the account
- A free 4-year Santander 16-25 Railcard to save 1/3 on rail travel fares in Great Britain
- Earn cashback up to 15% at a range of major retailers with the Santander debit card
- You must pay in at least £500 per academic term and register for online banking
- You must be aged 18 or over and studying on a full-time UCAS registered course of two or more years’ duration
- A free-free arranged overdraft of £1,000 year 1, £2,000 in year 2 and £3,000 in year 3 and beyond
- No interest is paid on the balance of the account
- You must be registered for Internet Banking
- You must pay in at least £500 per term from the date the account is opened
- An arranged overdraft is subject to Nationwide checking your credit history and ensuring it is affordable for you
- Once you have reached the overdraft limit, no further payments can be made (meaning you can't go into an unarranged overdraft)
- You must be 18 or over, have been a resident in the UK for at least 3 years and have been accepted on a qualifying course
- A fee-free arranged overdraft of up to £1,000 in year 1, £2000 in year 2 and £3000 in year 3
- Once you have reached the overdraft limit, no further payments will be made (meaning you can't go into an unarranged overdraft or incur any fees)
- No fees for an unarranged overdraft, but payments may well be withheld
Tips for opening a student bank account and managing your money
- Create a budget before you leave home so that you fully understand your likely income and expenses at university/college. Check out our article 'The best budgeting apps in the UK - how to budget without trying'
- Getting a fee-free overdraft is great but try only using it in emergencies
- With any student account make sure you are aware of any charges. It's also worth considering moving to a graduate account when you finish your course as it will typically give you a longer interest-free period to pay off the overdraft you may have accrued
- Check your credit rating before applying for a bank account to make sure your application has the best chance of success
- Check out our article '7 ways to get the most out of your money at university'
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