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Student bank accounts

Student bank accounts

Grab the top overdrafts and freebies in 2022/23

Chris Owen
Chris Owen | Edited by Helen Saxon
Updated 1 August 2022

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

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Top-pick student bank accounts

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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 your passport, birth certificate or current UK driving licence.

In addition, you'll need your UCAS code or 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 seven student banking need-to-knows

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

  • 1. Get the biggest and longest 0% overdraft you can – to avoid horrid 40% rates

    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, and the priority is 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 that it outweighs this.

    Some banks offer overdrafts that are 'guaranteed', whereas others offer overdrafts 'up to'. If it's guaranteed, you'll definitely get the stated limit if you've been accepted for the account (and asked for the max limit). If the account says you can get 'up to' an amount, you'll only get that amount if you have a good credit record.

    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.

  • 2. You need to be 18 to get an overdraft (though some banks let you open an account at 17)

    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.

  • 3. Never go over your overdraft limit – BUDGET!

    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.

  • 4. Beware, you'll be credit checked when you apply for the account or ask for an overdraft limit increase

    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.

  • 5. Most accounts only let first-years open them, but a few let you switch later on

    Most banks only let first-year students apply for their current accounts, and some even put a time limit on when you can do that. 

    But a few banks do let you switch existing student accounts during your studies. So if you're going into your second, third or fourth year of study and you're not happy with your student account, check to see if you can switch. 

    You'll usually get the same terms as others in the same year of study – including any freebies. However, overdraft limits are not transferred, so be sure to check the new account at least matches what you already have.

    The opening and switching policies for our top three student accounts are  in the table (if you're switching to a different student account check the bank will allow it)...

    Bank When can first-year students apply? When can second-year or higher students apply?
    Santander At any point in their first year At any point, though you'll need to switch from another account – you can't just apply
    HSBC At any point in their first year They can't. Only first-year students can apply or switch
    Nationwide Within two months of course starting, unless they're an existing customer (1) They can't, unless they're an existing Nationwide customer (1), then they can apply up to 18 months after the course starts

    (1) Defined as having had a Nationwide mortgage, savings or current account for 12 months or more. 

    Most banks that offer student accounts are part of the Current Account Switch Service, so you can easily switch your existing bank account – or even another student account – as part of the normal process. Just open a new account with your chosen bank, then request a switch through it – the process is straightforward and takes just seven working days. The switching service will automatically close your old account and move your money, direct debits, standing orders etc across.

  • 6. DON'T just pick an account because that bank has a branch near your university

    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.

  • 7. 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.

    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 2022/23

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. Remember to check this when your course ends though, as other top graduate accounts may beat it.

Top student accounts 2022/23

The only account with a guaranteed 0% overdraft each year, plus get a free four-year railcard. The Santander 123* student account gives a definite £1,500 0% overdraft in years one to three to all accepted (provided you pay in £500+ each term). You can also claim a free four-year 16-25 Railcard (worth £100) which gets you a third off many rail tickets – though it's not valid in Northern Ireland. You'll be sent a railcard code within five days of opening the account and registering for online banking. But it's only valid for 60 days. Do note that you'll need to be a first-year uni student or starting a level 4-7 apprenticeship to apply. (Not in your first year? You may be eligible but will need to switch to this account.)


Santander*

0% overdraft: 
- Years 1-3: £1,500

- Year 4: £1,800

- Year 5: £2,000

 

Perks:

- Four-year 16-25 Railcard

New. Higher possible 0% overdraft from year two, plus £100 FREE cash. The HSBC student account offers a guaranteed £1,000 0% overdraft in the first year, though limits aren't guaranteed in subsequent years – so you'll need to ask for increases and how much you'll get depends on your credit record. The account's open to first-year under- and postgraduates, and those doing certain BTEC courses.

HSBC

0% overdraft:

- Year 1: £1,000

- Year 2: up to £2,000

- Year 3 & beyond: up to £3,000

 

Perks:

- £100 FREE cash. To get it, spend on the debit card 5+ times in the first 30 days.

New. Joint-highest 0% overdraft plus £100 FREE cash – though limits are not guaranteed. The Nationwide's FlexStudent account offers a 0% overdraft which matches HSBC above – starting at £1,000 and rising to £3,000 in year three – although again limits aren't guaranteed. The amount you'll get at 0% depends on your credit record, and you'll need to ask for the increases. To qualify for the overdraft you must pay in £500+ per term (for example, your maintenance loan). The account's open to those on a UCAS-accredited course or apprenticeship, though you must apply within two months of starting the course.


Nationwide

0% overdraft:

- Year 1: up to £1,000

- Year 2: up to £2,000

- Year 3 & beyond: up to £3,000

 

Perks:

- £100 FREE cash. To get it, credit the account with £500+ by 16 Dec. The £100 is then paid within 14 days.

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 Financial Services Compensation Scheme up-to-£85,000 savings protection, though note HSBC's is shared with First Direct and Santander's with Cahoot – so don't hold more than £85,000 across brands that share this protection.

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 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
NatWest £500 in term one, then up to £2,000 for the rest of your time at uni New. £80 cash and a four-year Tastecard
Royal Bank of Scotland £500 in term one, then up to £2,000 for the rest of your time at uni New. £80 cash and a four-year Tastecard
Co-op £1,400 in year one, up to £1,700 in year two and then up to £2,000 for the rest of your time at uni None
Lloyds Bank Up to £1,500 in years one to three, then up to £2,000 Cashback when you spend at certain retailers
Bank of Scotland Up to £1,500 in years one to three, then up to £2,000 Cashback when you spend at certain retailers
Halifax Up to £1,500 Cashback when you spend at certain retailers, plus 0.1% interest
Barclays £500 in term one, then up to £1,000 in the rest of year one; then up to £1,500 for the rest of your time at uni None
TSB Up to £1,500 (guaranteed £500 for the first six months, up to £1,000 in months seven to nine, and up to £1,500 from month 10) 5% interest on balances up to £500
Ulster Bank Up to £1,000, or up to £3,000 if you study medicine, dentistry, law, accountancy, pharmacy, optometry, physiotherapy or veterinary science None

Table ranked by biggest overdrafts in years one to three. Last updated July 2022.

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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...

  • 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 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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