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Student Bank Accounts Grab £2,000 0% overdraft, or free railcard

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Best Student Accounts0% overdrafts, freebies including railcards - big banks love enticing new students with goodies. Don't just take the first, though. This is a guide to bagging the most, whether you're a new student or you're already there.

Accounts for the September start are usually launched in July & August. Those with an unconditional offer can apply now, but if your offer's conditional, you'll usually have to wait until you've got your A-level results to open an account.

Five need-to-knows

1.Get the biggest 0% overdraft - unless huge freebies beat it

Most students need an overdraft - where your bank account lets you spend more than you've got - and banks don't charge for them, up to a set amount. Aim to get the biggest guaranteed 0% overdraft that lasts as long as possible. The only time this doesn't apply is if the freebie on offer is so valuable to you it outweighs this.

Be wary of banks offering bigger overdrafts than our top picks - some give 'guaranteed' amounts, others 'up to' amounts - so make sure you're comparing like with like. However, you must ask for extensions each year, even on guaranteed limits - they're not applied automatically.

2. Never go over your overdraft limit

This isn't a rule just for students, it's a rule for life. The game changes totally 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'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 £25 per transaction (so a shopping trip spending £30 in five debit card transactions could see you facing £125 of charges!) - beware! More info in Bank Charges Compared.

3. Beware, you'll be credit-scored

When you apply for debt products, including a bank account with an overdraft, the bank will credit-score you to decide how desirable a customer you are based on behavioural predictions from your prior financial data.

As a student, it's likely there'll be very little data on you, which makes credit scoring very difficult. Sadly this can leave some students rejected due to ridiculous anomalies, and there may be no rhyme, reason or solution to this. Read the Credit Scoring guide.

4. DON'T pick based on the closest branch or ATM

Just because there's particular bank on the campus you'll be going to, or a conveniently-located cash machine nearby, DOES NOT mean you should choose an account with it.

You can withdraw cash free of charge from any bank's ATM and almost every bank gives online access. Branch location has little relevance for able-bodied students. To compare, examine what's on offer and go for the best deal.

5. After uni, switch to a top graduate account

You'll be pleased to know that for at least a year after finishing your course, you're still eligible for preferential terms, including 0% interest overdrafts, allowing you to gradually pay off the debt.

Switch to the top graduate account to continue getting the benefits.

Student accounts: The basics

What is a student account?
Student accounts are bank accounts made for those in higher education. They let you pay money in and out, and offer additional benefits such as an interest-free overdraft.

You'll get a debit card, which allows you to pay for things in shops and online without the need to withdraw cash. Read Who Counts As A Student? for further details on who is eligible to open a student account.

What is an overdraft?
An overdraft facility allows you to spend more money than you have in your account, up to a certain limit. Student accounts provide a set level of overdraft interest-free for the duration of your course.

Remember the bank is just lending you this money. It will need to be paid back, so don't get too comfortable. Always keep in your mind that's it's not actually yours, it's the bank's.

It costs nowt... UNLESS you exceed your overdraft
The cost of banking is measured in terms of interest rates and fees. Interest is the cost of borrowing money, or the reward for saving it. So 5% interest on savings means you earn £5 per £100 per year on the cash.

All of our top pick accounts provide an agreed interest-free overdraft limit. Anything up to that will not be subject to fees or interest - good news.

However, this is all provided you stay within your overdraft limit. Exceeding it can cost up to £25 per transaction, plus interest on top.

Quick questions

You'll usually need an unconditional offer or A-Level results to open an account

Make sure you've got the right ID

Existing students can switch to grab the best deals

Max the gain, then ditch & switch after uni

The overdraft cash ISN'T yours, but you CAN repay gradually

Check how much money you'll have coming in.

Best buys: Top student accounts

The high street banks compete in a red-hot battle. They publish ever bigger overdraft limits, but then sneakily won't allow all students to have them. The key is whether the overdraft is 'guaranteed' or 'up to' - the latter means it's just a reported maximum. All accounts require you to pass a credit score.

Good 0% overdraft, with cracking freebie

Santander

Santander - 4-year railcard & decent overdraftOverdraft up to £1,500, plus 1% in-credit interest.

  • Overdraft up to £1,500
  • Apply

Santander gives accepted new 123 Student Current Account holders who pay in £500/term a four-year 16-25 Railcard, which normally costs £120, and gives a third off most rail journeys. There's been a lack of student account freebies in recent years, so this is strong. It's also for existing students who switch to this.

You'll get an 'up to £1,500' overdraft for three years (granted on a case-by-case basis). You could even switch to another account with a bigger overdraft after your first year and keep the railcard, as you get it within three weeks of account opening, and it'll be valid for the full four years even if you switch away.

Unfortunately the railcard isn't valid in Northern Ireland - if that affects you, you may want to consider the other accounts listed below, although the overdraft on this account still makes it a decent option.

  • In-credit interest: 3% AER on £300 - £2,000
  • Arranged overdraft cost: No fees
  • Unarranged overdraft fees: £5 daily charge (max 10/month) plus paid/unpaid fees of £5/£10 per item.
  • 0% overdraft: Year one: £1,500 Year two: £1,500 Year three: £1,500

The BIGGEST 0% overdrafts

Co-op

Co-op Bank - £2,000 0% overdraft9 out of 10 given max limits, plus good customer service

  • Overdraft up to: £2,000
  • Apply

The ethical Co-operative Bank has got strong - but not the overall biggest - 0% overdraft limits of £1,400 0% in year one, £1,700 in the second year and £2,000 in the third, plus came second overall in our poll on customer service.

But unlike the banks below which shout about huge £3,000 limits, Co-op's told us 90% of successful applicants will get the full amounts advertised (if you pay in your student loans, and don't incur charges, plus you must ask for the increases at the beginning of each year). Please tell us if you get the full 0%.

  • In-credit interest: None
  • Arranged overdraft cost: 9.9% EAR.
  • Unarranged overdraft fees: 18.9% EAR plus £15 unpaid item fee (max £150 per quarter).
  • 0% overdraft: Year one: £1,400 Year two: £1,700 Year three: £2,000
Halifax logo

Halifax: Highest 'up to' overdraft limits0% overdraft up to £3,000, though likely you'll get less.

  • Overdraft up to: £3,000
  • Apply

The Halifax student account gives overdraft limits of 'up to' £3,000, though only the first £1,000 is guaranteed - the rest's decided on a case-by-case basis. You can ask for increases from what you're given, but previous year's feedback was it's unlikely to go higher than the initial £1,000 in year one.

Never, EVER go over the interest-free limit, or you'll be stung with huge rates up to 24.2% AER plus a monthly fee of £28, and returned item fees of up to £10.

  • In-credit interest: 0.1% AER
  • Arranged overdraft cost: 7.2% EAR
  • Unarranged overdraft fees: 24.2% plus monthly fee of £28 and £10 returned item fee.
  • 0% overdraft: All years: £1,000 initially, up to £3,000 (not guaranteed)
HSBC

HSBC joint highest 'up to' overdraftAlso offers up to £3k 0% overdraft

  • Overdraft up to: £3,000
  • Apply

The HSBC account also shouts loudly about a maximum interest-free overdraft of up to £3,000, but the feedback from last year tells us it's often only up to £1,000 by the end of year one.

If accepted, you'll initially get just £500. You must then ask for further increases, but you won't be guaranteed to get the full amount. We welcome your feedback, detailing if you were accepted and the overdraft limit you were offered.

  • In-credit interest: 2% AER
  • Arranged overdraft: Can only borrow up to £3k
  • Unarranged overdraft fees: Returned item fees of up to £25.
  • 0% overdraft: All years: £500 initially, up to £3,000 (not guaranteed)

Nine high street banks offer student accounts, each with varying overdraft limits, incentives and terms & conditions.

Compare student accounts Compare up to three at a time below

/ BoS

2013/14 student account details
Eligibility criteria (and minimum age)
In full-time higher education in the UK, studying for a degree/degree-equivalent or post-graduate course. Pay your main source of funding into the account. Permanent UK resident.
UK citizen or UK resident for at least 3 years. Over 17 years and 6 months old, and in full-time higher education. Proof of funding is required (can be a letter from parents, or Student Loans Company). Must make an initial deposit of £300 to activate the overdraft.
At least 18 years old and resident in UK. Must have a confirmed place at a higher education institution for a degree or HND course. Main source of funding must be paid into account.
Minimum 18 years old; UK national studying full-time, min 3 years, at degree or equivalent. Letter of confirmation from university is required.

Min age 17, resident in UK/Channel Islands/Isle of Man for at least 3 years, must not hold any other student account. Must have proof of entry onto full-time higher education course.

An Early Bird account is available if you don't yet have confirmation of your course. It will be upgraded to the full student account when you show your proof of entry.

You must be 17 or over, have lived in the UK for the past three years and be studying on a full-time course that's at least two years in duration, or on a one-year access course leading onto a full-time degree.
1st year undergraduate Student Accounts are available only to permanent UK resident students (min 3 years) who are completing:
(a) a full-time undergraduate higher education course of at least two years' duration; or
(b) a full-time postgraduate course, at a university or college of higher education in the UK.
Unconditional letter of acceptance required as proof of student status.
1st year undergraduate Student Accounts are available only to permanent UK resident students (min 3 years) who are completing:
(a) a full-time undergraduate higher education course of at least two years duration; or
(b) a full-time postgraduate course, at a university or college of higher education in the UK.
Unconditional letter of acceptance required as proof of student status.
Minimum interest-free overdraft limits
Year 1
Up to £2,000
£1,400
£1,500
£1,000 on opening. Then up to £3,000.
£500 on opening. Then up to £3,000.
£1,500 tiered in the first year:
£500 for the first 6 months,
£1,000 in months 7-9,
£1,500 after that.
Up to £1,000, tiered by term; £500 limit in first term,

£750 limit in second term,

£1,000 limit in third term
.
Up to £1,000, tiered by term; £500 limit in first term,

£750 limit in second term,

£1,000 limit in third term
.
 
Year 2
Up to £2,000
£1,700
£1,500
Up to £3,000
Up to £3,000
Up to £1,500
Up to £1,250
Up to £1,250
 
Year 3
Up to £2,000
£2,000
£1,500
Up to £3,000
Up to £3,000
Up to £1,500
Up to £1,500
Up to £1,500
 
Year 4
Up to £2,000
N/A
£1,800
Up to £3,000
Up to £3,000
Up to £2,000
Up to £1,750
Up to £1,750
 
Year 5
Up to £2,000
N/A
£2,000
Up to £3,000
Up to £3,000
Up to £2,000
Up to £2,000
Up to £2,000
 
Interest-free average
3-year course
Up to £2,000
£1,700
£1,250
Up to £3,000
Up to £3,000
£1,500
Up to £1,250
Up to £1,250
 
5-year course
Up to £2,000
N/A
£1,510
Up to £3,000
Up to £3,000
£1,700
Up to £1,500
Up to £1,500
 
Interest-free limits guaranteed, or case-by-case?
Subject to application and status

Not guaranteed, but 89% of overdraft requests are approved. Decisions are made on the basis of account behaviour from 16 September, and if you've used it as your main account.

To keep the overdraft, you must pay in your chosen income method, as detailed on your initial application, each term. This includes student loans, money from parents, grants, etc.

Not guaranteed, assessed on individual basis.

£500 needs to be paid in each term to keep the overdraft facility.
£1,000 guaranteed on account opening. Further increments will need to be applied for.

Credits of £500 per quarter will be required to consider extending an overdraft.

Overdraft limit will be increased over time and based upon account conduct.
Guaranteed at least £500 upon account opening. All overdraft requests are subject to status and are assessed on an individual basis.
No, decided case by case.
Not guaranteed. The maximum in first year is normally given. To remain eligible for the overdraft, you'll need to use it as a main current account by
depositing at least £750 every six months, and making at least three debit transactions every month.
Not guaranteed. The maximum in first year is normally given. To remain eligible for the overdraft, you'll need to use it as a main current account by depositing at least £750 every six months, and making at least three debit transactions every month.
Agreed overdrafts beyond the 0% limit
8.9% above the interest free limit, up to a max of £3,000.
9.9%
0%
7.2%
Can only borrow up to £3,000.
£10 buffer, then a £6 monthly fee and 8.21% EAR.
0%
0%
Unauthorised overdraft rate and fees
£22 fee every five working days your account is in its 'personal reserve', until account is credited to clear the reserve. You'll be advised of your personal reserve limit once an application is successful. Any payments debited from the personal reserve will be honoured.

£8 per transaction outside 'personal reserve', max 5 per day.
18.9%

£5 per day, max 10 days per month.


Paid item fee: £5

Unpaid item fee: £10
24.2%

£28 fee per month
Unpaid item fee: £10 max a day

Returned items (incl cheques, direct debits, standing orders):


Up to £10 - no charge.

Up to £25 - £10 per item.

£25 plus - £25 per item.

8.21%
£10 buffer and a grace period until 3.30pm to pay and avoid overdraft fees.

Monthly fee: £6. Returned item fee, £10.
Daily fees:
Up to £10 - no charge
Up to £25 - £5
£25 plus - £10.
0%

Unpaid fee: £6 per item greater than £6 (max £60 per charging period).
0%

Unpaid fee: £6 per item greater than £6 (max £60 per charging period).
In-credit interest rate
0%
0%
1% AER on balances up to £500 no interest paid on balances above £500.
0.1%
1.5% above base rate on balances up to £1,000 (in 1st year only). 0% on all other balances.
0%
0%
0%
Can you transfer from other banks and get this year's deal?
Yes
Yes, the overdraft will be in line with the year of your course.
Yes, but you must switch your existing student account to Santander using its account transfer service for a guaranteed £250 interest-free overdraft. Once the account's been credited with £500, the correct level of overdraft will be given.
Yes. Overdraft will be based on personal circumstances
Yes, subject to status, assessed on an individual basis.
Yes. This will be based on the year of their study
Yes, but they won't be eligible for the free incentives (unless in 1st year). Overdraft limit is based on year of course
Yes, but they won't be eligible for the free incentives (unless in 1st year). Overdraft limit is based on year of course
Do the T&Cs stop you opening a student account elsewhere?
No
Yes.
No, but you can't have more than one Santander current account.
Yes
Yes
Yes
No, but must use the account as main bank account. NatWest reserves the right to remove 0% rate.
No, but must use the account as main bank account. RBS reserves the right to remove 0% rate.
Anything else?
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

It's also worth remembering that next year, even better accounts are possible, so it's worth checking whether you should switch. All next year's top deals will be in the free weekly email.

Don't need an overdraft? Maybe try stoozing...

Don't try stoozing unless you're a financial superheroFor that rare student breed, the ones who are always in credit, there are very few choices (even if you're occasionally overdrawn, go for the top overdraft deal).

No student accounts pay any significant interest if you're in credit and most top standard accounts require an income over £14,000 to open.

The prime option is to get a normal student account, and if you've got any spare cash, dunk it in the Top Savings Accounts. But there's a way to boost even that.

How to stooze your student account
Please don't even read this unless you're an anally-retentive financial superhero. The consequences of getting it wrong can be a real problem and with low savings rates the current returns just aren't that good anyway.

Those always in credit could PROFIT (provided they're financially disciplined) by opting for the account with the biggest and longest lasting interest-free overdraft and using a budgeting technique we call 'current account stoozing' (see the Stoozing guide for a full definition of the word).

Once you get your account, take cash out of it and plop it into a top-paying instant access saving account (see Top Savings and Cash ISA guides) leaving yourself reasonably near, but never over, your overdraft limit. Make sure you also manage any changes in limits and leave enough room to do your normal spending.

As a result, you're earning interest on money the bank lends you for free. Done right, this can add around £120 to a student's coffers over the length of a course. Similar tricks are possible with student loans (see the Student MoneySaving article). However, this isn't an excuse for spending or borrowing more. If you're not financially disciplined, please DON'T try it.

Do a budget the right way

It's a mantra parents push at their student offspring all the time. "You've got to do a budget young Johnny, it'll all go to hell if you don't, please do it Johnny, please..."

Yet "do a budget" is a meaningless phrase unless you understand your income.

work

With people who work it's easy:

You shouldn't spend more than you earn.¯

study

But when it comes to those going to university:

Students shouldn't spend more than they...

That's the big question that's never specified. Martin has a rule of thumb on it.

Add up student loan + grants + employment earnings + money from family, and that is your income. That's the amount you should try to budget to spend less than.

While 0% overdrafts are very useful and should help with cash-flow issues while you're a student, they're never part of your income. Always remember an overdraft is a LOAN and must be repaid (its rate will jump once you graduate).

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