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What other banks are offering student current accounts?
Other providers to consider in addition to those we have ranked above, include the Co-operative Bank, Barclays, Halifax and TSB.
While there are no freebies, the Co-operative offers the best 0% overdraft terms of this list at a guaranteed £1,400 in year one; up to £1,700 in year two; and then up to a maximum of £2,000 for the remainder of your time at uni.
The Halifax student account overdraft remains at £1,500 for every year you are at uni.
And, in the potentially unlikely event that you have a credit balance in your account, TSB pays a worthwhile 5% interest on balances up to £500.
Although they offer cool budgeting features with their apps, challenger banks such as Monzo and Revolut don’t offer specific student bank accounts.
How do student overdrafts work?
Pretty much all student accounts offer a certain amount of overdraft at 0% interest. This can be a lifesaver at uni so it’s a shrewd move to look for the student bank account with the biggest 0% overdraft.
Just note that some banks offer ‘up to’ the limit, so the number you see is not guaranteed. Limits usually increase with each year you’re at uni but you may have to actively request the increase.
Bear in mind that you will be credit checked when applying for an overdraft, so if you have missed or been late with payments in the past – such as for your phone contract – you could be turned down.
It’s worth remembering that, although a bank may describe an overdraft as ‘free’, you will still have to pay it back. Budget the best you can and try not to go overdrawn unless you can help it.
What happens if I exceed my student overdraft limit?
New rules introduced by the Financial Conduct Authority (FCA) in April 2020 mean banks can no longer charge higher fees for unauthorised overdrafts. Instead, interest on all overdrafts is charged at a single interest rate.
As a result, most banks simply won’t let students go into an unauthorised overdraft – if you try to go over your overdraft limit, your payment will be rejected.
However, it’s worth ensuring you have a buffer in place to keep yourself on the right track.
What perks are on offer with student bank accounts?
The benefits banks use to persuade students to pick them for their student banking vary from year to year, but are generally things such as:
- 16-25 Railcard
- Contactless payments
- Compatibility with Apple Pay, Android Pay and Google Pay
- Cashback on purchases
- Retailer discounts
- Tastecard
- Amazon Prime or Spotify membership
- Uber Eats vouchers
- Cash
When it comes to perks, think about the ones you will benefit most from. A 16-25 Railcard saves you a third off most train fares – handy if you’ll be travelling by train to go home for regularly for weekends.
If you get food delivered regularly, Uber Eats vouchers might be a good bet. But if you go out to eat more, Tastecard has loads of great deals.
But generally, while these perks sound great, the interest-free overdraft tends to be more important.
What happens to my student account when I graduate?
Normally, once you finish university or college your bank will convert your student account into a graduate one.
This could reduce the overdraft amount on offer, and you might have to start paying interest on any money you owe.
When you graduate, you’ll be free to shop around and open a graduate or mainstream bank account with another bank.
Do student bank accounts pay interest?
With the exception of TSB this year, hardly any banks pay interest to students in credit.
However, if you plan to save money while at university, or sit on your student loan for a while, you can normally open a savings account alongside your current account which will pay interest.
Even better, search the savings market for the best interest rates available.
How do I find the best student bank account?
Wait until all the major banks have launched their student accounts, then compare them side by side to see which one best suits your needs.
If you consider the free overdraft on offer ahead of the perks, and always stay within your allocated overdraft limits, it’s difficult to go wrong.
How do I open a student current account?
You can apply for a student bank account online or in a bank branch. You will need:
- Photographic ID such as driver’s licence or passport
- Proof of address, for example a bank statement or recent utility bill
- Evidence of your student status such as your UCAS offer letter or a letter from your university
- A copy of your student loan financial assessment form
- An acceptable credit score (the bank will check this with a credit reference agency)
