Student Bank Accounts

Grab the top overdrafts and freebies in 2018/19

Railcards, 0% overdrafts and vouchers; 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 your finances.

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.

To be accepted 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.

A student account's just the tip of the iceberg when it comes to finances at uni – for more help, take a look at our 10 Student MoneySaving Tips guide.

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

  • Existing students can usually switch their account to get the same terms as others in the same year of study – though certain accounts restrict opening to first year students. If you're in your second or third year, or beyond, 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.

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) 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 £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, £2,000 in year 2 then £3,000
    NatWest Up to £500 in term 1, then up to £2,000
    Royal Bank of Scotland Up to £500 in term 1, then up to £2,000
    Santander Up to £1,500 in years 1-3 then up to £1,800 in year 4 and up to £2,000 in year 5
    TSB Up to £1,510

    Last updated August 2018.

    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.

  • 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 (Equivalent Annual Rate). 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!

  • 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 for able-bodied students. To compare, 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.

Top student accounts 2018/2019

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 0% overdraft with £1,000 guaranteed in first year, free £80 Amazon vch + one year Amazon Prime

The HSBC Student Account is one of our top picks as it offers first-year university students and apprentices an £80 Amazon gift card if you apply by 31 December 2018, a year's Amazon Prime Student worth £39, plus a guaranteed £1,000 0% overdraft in year one.

Other accounts may offer higher overdraft limits, but those are usually 'up to' – HSBC's is guaranteed in year one, and you have the option to increase it to up to £2,000 in year two and up to £3,000 in year three, though the amount you'll get in those years isn't guaranteed.

Need-to-knows
  • You need to be 18 or over to open this account, have lived in the UK for three years, and have a guaranteed offer from a uni or apprenticeship.
  • HSBC will email you within 7 days of opening your account with details of how to claim the Amazon freebies.
  • Diarise to cancel your free Amazon Prime membership after 12 months or you'll be charged.
  • After your course, you'll be transferred automatically to the HSBC Graduate account.
  • You can open a linked regular savings account paying 3% interest for a year (see our regular savings accounts guide for more).

In-credit interest: None
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

  • 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.

  • Once you've graduated, HSBC will transfer your account to be a Graduate account.

    In the Graduate account, your 0% overdraft tapers off over the two years after graduation (up to £1,500 the first year, and up to £1,000 the second year), but other graduate accounts may beat it.

Big guaranteed 0% overdraft which increases with your year of study to a max of £3,000

The Nationwide Building Society FlexStudent account is one of our top picks for large 0% overdraft limits of £1,000 in year one, £2,000 in year two and £3,000 in year three.

Others may advertise higher amounts, but they are 'up tos'. With Nationwide these are guaranteed amounts that you will get – as long as you pay in at least £500 per term (eg, your maintenance loan/cash from parents) and don't have credit problems.

If you know you won't need the full overdraft, the accounts above and below may be better, as they also come with freebies.

Need-to-knows
  • You need to be 18 or over and have lived in the UK for the last three years.
  • 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 also open a linked 5% regular saver.
  • 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).

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: £2,000, Year 3 & beyond: £3,000

  • 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.

  • 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.

Decent 0% overdraft, though full amount isn't guaranteed, plus free 4-yr railcard 

Santander* gives a four-year 16-25 railcard (worth £90ish) which gets you a third off rail travel for full-time students and level 4-7 apprentices who open its 123 Student Current Account.

You automatically get a £250 0% overdraft when you open the account, then get an 'up to £1,500' 0% overdraft for three years, though it's judged on a case-by-case basis. To get the railcard and 0% overdraft above £250, you must pay in £500/term and register for online banking.

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 the account opening.

Need-to-knows
  • If you're not in your first year of study you must switch your account from another bank.
  • 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.

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 £50.
0% overdraft: Years 1-3: up to £1,500. Year 4: up to £1,800. Year 5: up to £2,000.

  • 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.

  • Unfortunately the railcard isn't valid in Northern Ireland, although the overdraft still makes this account a decent option.

  • Go into an unauthorised overdraft, as the fees are huge, so avoid at all costs. Arranged overdrafts aren't permitted above the set limits.

  • 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.

  • 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 £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 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 2018/19 guide for more on fees and funding.

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