best student bank accounts

Student Bank Accounts

Grab the top overdrafts and freebies in 2021

Free 0% overdrafts and railcards – banks love reeling in new students with goodies, and this year's no different. This guide's about bagging the best deal.

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What is a student account?

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.

Usually you'll open one after your A-Level or Scottish Highers results have come through and you have a confirmed place at university.

What ID do I need to open a student account?

As with all bank accounts, you'll need proof of address and identity. This can include: passport, birth certificate or current UK driving licence.

In addition, you'll need a UCAS confirmation letter with an unconditional offer or, if your offer's conditional, A-Level results that meet that condition (or a letter from the university you'll be attending confirming your place). 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.

The student account need-to-knows

Here are the big things you need to consider...

  • Most students need an overdraft, where the bank lets you spend more than you've got (at no extra cost) up 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, meaning you could end up with a bigger overdraft limit after your first year, so factor this into your decision-making process. However, you must usually 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.

    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.

  • You need to be 18 or over to get an overdraft – UK law doesn't allow banks to lend to anyone younger.

    This particularly affects Scottish students, as you're more likely to finish Highers and start uni at 17. If this is the case, you CAN open a student account, but you'll need to wait until you're 18 to get an overdraft as part of it.

    Not all banks will open a student account for 17-year-olds, but a few do allow it, including Bank of Scotland, Lloyds, NatWest, RBS and TSB.

  • This isn't a rule just for students, it's a rule for life. Going over your overdraft limit isn't as pricey as it used to be, as banks are no longer allowed to charge more for busting your limit.

    However, you can still be charged for any payments that fail to go through, and it's easy to end up caught in a vicious cycle that's tough to 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 a high rate of interest. It's always far better to plan and budget to avoid this.

  • When you apply for debt products, including a bank account with an overdraft, the bank will credit-check 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 checking 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.

  • 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 these days, so examine what's on offer and go for the best deal.

  • 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.

    Switch to the Top Graduate Account to continue getting the benefits. Many of these accounts operate by reducing your 0% overdraft limit each year, allowing you to gradually pay it off before the interest-free period ends.

Top student accounts 2020/2021

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 former means you'll get it if you've been accepted for the account (and asked for the max limit), but the latter means you'll only get it if you have a good credit record.

With all these accounts you'll usually need to be (or about to be) a first year student and have proof of acceptance to a university or further education course, which is often defined as lasting at least two years.

Important. All the below automatically turn into a graduate account once your course ends, which continues the 0% interest overdraft for a further two or three years – though the interest-free limit drops each year. Diarise to check when your course ends though, as other top graduate accounts may beat it.

Top student accounts 2020/21

The only account with a guaranteed 0% overdraft, plus get a free four-year railcard. The Santander 123* student account gives a definite £1,500 0% overdraft to all accepted, provided you register for online banking and pay in £500+ each term. Do that and you can also claim a free four-year 16-25 railcard (worth £90ish) which gets you a third off rail travel – though it's not valid in Northern Ireland. You'll be sent a code to use on the railcard site within 60 days, so don't forget. 


 

Santander*

0% overdraft: 
- Year 1-3: £1,500

- Year 4: £1,800
- Year 5: £2,000

 

Perks:

- Four year 16-25 railcard

Top for freebies (£100 in cash and vouchers) and a higher possible 0% overdraft – though it's 'up to'. First-year university students or apprentices can get the HSBC student account which offers a free £80 + a £20 Uber Eats voucher or Asos Premier (unlimited next day delivery) for a year. You'll need to apply by 31 Dec 2021 and use your debit card five times in the first month to get it. However the 0% overdraft is an 'up to', so the limit you'll get depends on your credit record. 



 

HSBC

0% overdraft:

TABLE_CELL_STYLE

- Year 1: up to £1,000

- Year 2: up to £2,000

- Year 3 & beyond: up to £3,000

Perks:
- Free £80 if spending 5+ times in the first month

- Free £20 Uber Eats voucher or Asos Premier for 1yr

An alternative account to HSBC that offers large 0% overdrafts, but it's another 'up to'. The Nationwide FlexStudent has no intro freebies but offers the joint-highest 0% overdrafts – starting at £1,000 and rising to £3,000 in year three – provided you pay in £500+ per term (eg, maintenance loan). However, like HSBC above, it's 'up to' so the amount you get will be determined by your credit record. 



Nationwide 

TABLE_CELL_STYLE

0% overdraft:

- Year 1: up to £1,000

- Year 2: up to £2,000

- Year 3 & beyond: up to £3,000

Important. You'll need to stay within your overdraft limit. If you exceed it, all these accounts will restrict access until you get the balance back under your limit – so no debit card spending or cash withdrawals. All accounts have full FSCS up to £85,000 savings protection, though note HSBC is shared with First Direct and Santander shared with Cahoot. 

Other student accounts

These accounts aren't our top picks as the 0% overdrafts are not as generous as the ones above and/or the perks aren't as lucrative – though don't be swayed by a freebie if it'd mean a lower overdraft.

Next best student accounts

Lender 0% overdraft amount Main perks
Bank of Scotland Up to £1,500 in years 1-3, then up to £2,000 Cashback when you spend at certain retailers
Barclays £500 in term 1, then up to £1,000 in the rest of year 1; up to £2,000 in year 2; up to £3,000 in year 3 12-month subscription to Perlego, which gives online access to textbooks & other reading material
Halifax Up to £1,500 0.1% interest, plus cashback when you spend at certain retailers
Lloyds Bank Up to £1,500 in years 1-3, then up to £2,000 Cashback when you spend at certain retailers
NatWest £500 in term 1, then up to £2,000 for the rest of your time at uni £50 cash and a 4 year tastecard
Royal Bank of Scotland £500 in term 1, then up to £2,000 for the rest of your time at uni £50 cash and a 4 year tastecard
TSB Up to £1,500 (guaranteed £500 for the first 6mths, up to £1,000 in months seven to nine, and up to £1,500 from month ten) 5% interest on balances up to £500

Table in alphabetical order. Last updated July 2021.

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

For that rare student breed, the ones who are always in credit, there aren't many choices (even if you're occasionally overdrawn, go for the top overdraft deal).

But, if you don't need your overdraft, there is a way to make it make money for you (though with rock bottom savings rates, it's not going to be much). Here's how to do it...

  • 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 savings 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 £70 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 + employment earnings + money from family + any grants/sponsorship money, and that is your income.

While 0% overdrafts are very useful and should help with cashflow 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 guide for more on fees and funding.

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