How to find the best student account

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Student bank accounts could save you money, let you borrow for free and offer you freebies like gift vouchers and railcards. Here’s how they work and how to find the best one for you.

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If you’re planning to head off to university, you’ll want to choose the right student bank account. It’s important not to be overly swayed by the freebies on offer, but instead weigh up what each account has to offer in full before making your choice. 

What is a student account?

Student bank accounts work in a similar way to standard current accounts but they can only be opened by students and usually come with interest-free overdrafts and other benefits.

Do student accounts offer free overdrafts?

An overdraft lets you borrow money from your bank, so you can still pay for items even when you have no money left in your account.

When you use an overdraft, you have a negative balance. For example, if you had £10 left in your account and spent £50 on your debit card, your new balance would be -£40.

Overdrafts usually charge interest on the amount you borrow, but many student overdrafts are interest-free for several years as long as you stay within their limits. Some of these overdrafts may be tiered so you get a higher limit as you progress through your course.

For example:

  • £1,000 in your first year

  • £2,000 in your second year

  • £3,000 in your third year

Here is everything you need to know about how overdrafts work

What overdraft limits can you get?

You may be able to get an overdraft limit of up to £3,000 with a student bank account. If you go over this limit, payments may start to be refused by your bank – most banks will alert you by text if this is going to happen. If payments do go through and you go into an unarranged overdraft, your bank may charge you interest. 

Note that under new rules introduced in April 2020, banks can no longer charge monthly or daily fees for overdrafts. Instead, you can only be charged a single interest rate which applies to both arranged and unarranged overdrafts – you can no longer be charged a higher rate for using an unauthorised overdraft. 

Our student bank account comparison shows the maximum overdraft offered by every student current account.

When do you need to pay off your overdraft?

Your overdraft will only be interest-free for a limited time, but will usually last two to three years. After you finish your course, many student accounts will convert into a graduate account and most of these still offer an interest-free overdraft. This could give you enough time to get a job and pay off the amount you owe.

You can check how long each account offers an interest-free overdraft with our student bank account comparison

Are there any other fees on student accounts?

Yes, some student accounts charge for:

  • Unpaid direct debits or standing orders (if there is not enough money in your account)

  • Withdrawing cash in another country

  • Transferring money abroad

  • Providing old statements

If you think you will need any of the services, check for these fees before you apply.

What freebies do student accounts offer?

This depends on the bank, but you may be able to choose from extras such as: 

  • A free student railcard

  • Gift vouchers

  • A cash reward for opening the account

  • A TOTUM student discount card

  • 12-month Perlego subscription

  • Tastecard

Can you earn interest on your balance?

Some student bank accounts pay interest on the money you have in your account.

This can earn you a little extra but only if you have money in your account. However, you may be able to get a better interest rate with a separate savings account.

Who can get a student account?

Most student accounts require you to be:

  • In full-time higher education on at least a two-year course

  • Older than their minimum age (usually 18)

  • A UK resident

  • Able to pay in a minimum amount – such as your student loan – each term

Although student accounts are usually aimed at undergraduates, if you take a postgraduate course you can usually keep your student account or apply for a new one.

You can usually get a student account even if you do not have a job because your student loan counts as your income.

You can also apply for a student account if you are an older student as long as you are studying full time.

What documents will you need?

  • Proof you are a student (your UCAS status code is the simplest way to do this). You may also be able to use a letter from UCAS, a letter of acceptance, an enrolment offer or student loan or finance offer

  • Proof of your identity (like a passport or driving licence)

  • Proof of your address (like a bank statement or bill)

Will your credit rating be checked?

Yes. As part of your application, the bank will check your credit rating to see how reliable you are as a borrower and whether to give you an overdraft. If your credit score is poor, you may be rejected, or you may be offered a smaller overdraft limit. 

There are a few simple steps you can take to improve your credit rating before you apply. These include checking you’re on the electoral roll, checking your credit report for any mistakes and correcting them where necessary, and paying any bills in your name (such as your mobile phone bill) on time.

Which banks offer student accounts?

Many but not all UK banks offer student accounts. You can find which banks offer them using our student bank account comparison, which shows every account available in the UK.

How to choose the right student account

Finding an account that will save you money is much more important than choosing one with tempting freebies.

If you plan to use the account to borrow money, choose the one with the best overdraft instead of offers like gift vouchers. When comparing your options, consider:

  • How much you can borrow for free via an overdraft

  • How long the overdraft is free for

Our comparison includes every student bank account so you can find the best overdraft and any other features you need.

If more than one account offers what you want, choose the one that offers the best freebies. You can then apply to open the account online.

Check the account features

As part of your comparison, it’s also worth working out which of the following you want so that you can choose an account that offers everything you need:

  • Online banking

  • A mobile phone app

  • Mobile payments, such as Apple Pay

  • Cash withdrawals

  • A debit card

  • Contactless payments

If you need to visit your bank regularly, for example to pay in cash, choose one with a branch near to your home or campus. If you can manage your account online instead, a nearby branch is less important.

New bank accounts are offered all the time, so compare all of the best options to make sure you get the right one for you.

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