Railcards, 0% overdrafts and discount cards; banks love reeling new students in with goodies, and the latest batch of accounts are out.
This is a guide to bagging the best deal, whether you're a fresher or just refreshing finances.
Best Buy Student Accounts
Get the biggest 0% overdraft unless huge freebies beat it
Student accounts are simply 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.
Most students need an overdraft, where the bank lets you spend more than you've got (at no extra cost) to a set amount. Aim to get the biggest and longest 0% overdraft you can 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 for like.
It's also worth noting that many student bank accounts offer tiered overdraft amounts, which increase with each year of study, so you could end up with a bigger overdraft limit after your first year. However, you must ask for extensions each year, even on guaranteed limits they're not applied automatically.
Also be wary of applying for the maximum overdraft possible just because you can. If you budget well you may not need it as anything other than a buffer, and the smaller your overdraft, the less likely you are to get caught in a dangerous spending spiral.
Here are the student bank accounts available for new customers and the 0% overdraft amount they offer:
Lender 0% overdraft amount Bank of Scotland Up to £1,500 in years 1-3 then up to £2,000 Barclays Up to £1,000 in year 1, up to £2,000 in year 2, then up to £3,000 Halifax Up to £1,500 HSBC Up to £1,000 in year 1, up to £2,000 in year 2, then up to £3,000 Lloyds Up to £1,500 in years 1-3 then up to £2,000 Nationwide £1,000 in year 1, up to £2,000 in year 2 then up to £3,000 NatWest Up to £2,000 Royal Bank of Scotland Up to £2,000 Santander £1,500 in years 1-3 then £1,800 in year 4 and £2,000 in year 5 TSB Up to £1,500
Last updated Aug 2017.
When can I open a student bank account?
Usually, to be accepted you'll need a UCAS confirmation letter with an unconditional offer, or, if your offer's conditional, you'll need to have A-Level results that meet that condition.
As soon as you've got these, you can open an account, allowing you extra time to make full use of its benefits before the start of term. But beware, some banks may want a letter or other acknowledgement from the university you'll be attending confirming your place.
If in doubt, call the bank you want an account with and ask what its criteria are.
Do you have the right ID to open an account?
As with all bank accounts, you'll need proof of address and identity. This can include: passport, birth certificate, current UK photocard driving licence or full UK paper licence.
I'm an existing student. Can I switch to a different bank account?
Existing students can switch their account to get the same terms as others in the same year of study. If you're a second or third year student, be sure to check the new account at least matches what you're already being offered (or have) in terms of a 0% overdraft.
For more details, see the top accounts below.
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!
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'll 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.
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 previous 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 Build Your Credit History and the main Credit Scoring guides for more info.
DON'T pick based on the closest branch or ATM
Just because there's a particular bank on campus, or a conveniently-located cash machine nearby, it DOESN'T 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.
After uni, switch to a top graduate account
Your aim straight after uni should be to pay down your 0% overdraft. If that's not possible, 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.
Best buys Top student accounts 2017/18
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 you'll only get it if you have a good credit record, and all accounts require you to pass a credit check.
Some banks also try and attract students with the promise of freebies, from railcards to Amazon vouchers. While you should never be enticed just by these offerings, they sometimes offer decent overdraft limits too so can be a good option.
We've included the best of both worlds here.
Big 'guaranteed' 0% overdraft which increases with your year of study to a max of £3,000
Nationwide Building Society
The Nationwide Building Society FlexStudent account is our top pick for large 0% overdraft limits of £1,000 in year one, up to £2,000 in year two and up to £3,000 in year three.
Others may advertise higher amounts, but they are 'up tos'. With Nationwide these are actual amounts that you will get, though we've called it 'guaranteed' - as you'll only get this much if you keep to the account conditions and don't have credit problems.
If you know you won't need the full overdraft, the Santander account below may be better, as it also comes with a railcard freebie, worth £90.
- You need to be 18 or over to open this account and have lived in the UK for the last three years. You also need to pay in at least £500 per term e.g. your maintenance loan/cash from parents.
- You need to apply for the account within two months either side of your course start date.
- If you're in credit, you'll get 1% AER (variable) interest on balances up to £1,000
- You can set your own overdraft limit - you don't have to ask for the maximum right away.
- After your course, you'll be transferred automatically to a Nationwide FlexGraduate account (more info in the key questions below).
- Please let us know how big an overdraft you get: Nationwide feedback.
- In-credit interest: 1% AER (variable) up to £1,000
- Arranged overdraft cost above 0% limit: N/A (you won't be able to use it until you get the balance back under your limit)
- Unarranged overdraft fees: N/A (you won't be able to use it until you get the balance back under your limit)
- 0% overdraft: Year 1: £1,000 Year 2: up to £2,000 Year 3 & beyond: up to £3,000
What's the deal with going over your overdraft limit? This account's not designed to allow you to do that. But, if you do go over your limit, you won't be able to use the account until you get the balance back under your agreed limit - so no debit card spending, no cash withdrawals.
If you're not at the maximum overdraft for your year of study, you can request to increase the limit to the maximum.
Can I get a graduate account? Once you've graduated, Nationwide will transfer your account to be a FlexGraduate account. It's not available to apply for - you can only get it if you've had the FlexStudent account.
In the FlexGraduate account, your 0% overdraft tapers off over three years (£2,500 one year after graduation; £1,750 after two years and £1,000 after three years), but other graduate accounts may beat it.
Free 4-yr railcard & decent 0% overdraft, though amounts aren't guaranteed
Santander* gives a four-year 16-25 railcard for full-time students, letting you get a third off rail travel, which we value at £90. However, the overdraft offered here is smaller than Nationwide's above though, so if you know you'll need more money best to prioritise a bigger 0% than a freebie.
With Santander, you get an 'up to £1,500' 0% overdraft for three years, though it's judged on a case-by-case basis. If your course is longer, the maximum 0% limit increases in further years. You could 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.
- You must pay in £500/term and register for online banking to be eligible for the railcard and 0% overdraft.
- You automatically get a £250 overdraft when you open the account, then up to £1,500 in years one to three if you make the £500/term pay-in.
- You get up to £1,800 in year four and up to £2,000 in year five, if your course is that long.
- The overdraft limits aren't guaranteed but most accounts usually get close to them.
- You can only apply if you've an unconditional uni place, or you're already a student.
- If you're in your second year or later you can switch to this account from your existing student account and you'll still get the four-year railcard.
- We valued the railcard by working it out against a three-year railcard which normally costs £70, as four-year cards aren't available for general purchase. The railcard is also available to full-time students aged 26 and over.
- Santander shares its £85,000 UK savings safety guarantee with Cahoot, so don't hold more than £85,000 across the two banks.
- As a 123 account holder you're also eligible for savings accounts and loans at preferential rates, eg, a linked 5% regular saver.
- Please let us know how big an overdraft you get: Santander feedback.
- In-credit interest: 1% for £100-£200, 2% for £200-£300, 3% between £300 and £2,000
- Arranged overdraft cost: No fees
- Unarranged overdraft fees: £5 daily charge (max 10/month), paid/unpaid fees: £5/£10 per item. Max monthly charge of £95 (£50 from 10 July 2018)
- 0% overdraft: Years 1-3: up to £1,500. Year 4: up to £1,800. Year 5: up to £2,000.
How do I get the railcard? To get the railcard, you'll need to open a Santander 123 Student Account for the first time and make the £500/term pay-in. You must register for online banking, which will take 7-10 days to set up, then enter a special code on the railcard website, which is valid for 60 days ONLY. Make sure you enter the code within the timeframe, as they won't issue you another code. You'll get your railcard within five working days of ordering.
Can I get the railcard if I'm in Northern Ireland? Unfortunately the railcard isn't valid in Northern Ireland, although the overdraft still makes this account a decent option.
What should I avoid with this account? Go into an unauthorised overdraft, and the fees are huge, so avoid at all costs. Arranged overdrafts aren't permitted above the set limits.
How can I give feedback on this account? Please let us know your experiences and any problems: Santander feedback.
Don't need an overdraft? Maybe try stoozing...
For 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 £6,000 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.
With people who work it's an easy message:
You shouldn't spend more than you earn.
But when it comes to those going to university, you need to:
Add up student loan + grants + employment earnings + money from family, and that is your income.
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).
But if you're going to university next year or are currently studying, funding is key. Make sure you're aware of the loans and grants available to you and plan accordingly. See our Student Loans 2017/18 guide for more on fees and funding.
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