Coronavirus Travel Rights
23 April 2021
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Free 0% overdrafts and railcards – banks love reeling in new students with goodies, and this year's no different. This is a guide to bagging the best deal, whether you're a fresher or just refreshing your finances.
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.
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.
We've focused our top picks on the accounts that have guaranteed overdrafts, but the table below has more information about other accounts if neither of these suit.
The Nationwide FlexStudent account offers accepted new students a £1,000 0% overdraft in year one, £2,000 in year two and £3,000 in year three. You'll definitely get these limits if you ask for them – as long as you pay in at least £500 per term (eg, your maintenance loan/cash from parents) and don't have credit problems.
0% overdraft: Year one £1,000, year two £2,000, year three and beyond £3,000
Unarranged overdraft fees: N/A (you won't be able to use it until you get the balance back under your limit)
Savings protection: Full
Who's eligible: First-year university students (see FAQs)
The Santander 123* student account gives accepted full-time students and apprentices a guaranteed £1,500 overdraft in years one to three. You also get a four-year 16-25 Railcard (worth £90ish) which gets you a third off rail travel, though you may not be travelling as much as normal with coronavirus travel restrictions and more online lectures.
0% overdraft: Years one to three £1,500, year four £1,800, year five £2,000
How to get it: Pay in £500/term and register for online banking
Unarranged overdraft fees: N/A (you won't be able to use it until you get the balance back under your limit)
Savings protection: Shared with Cahoot
Who's eligible: University students about to start or in their first year, or apprentices (unless switching, see FAQs)
These accounts aren't our top picks as the overdrafts are all "up to £x" rather than guaranteed as the ones above, so there's a chance the bank won't give you the full amount, making it harder to base your pick on it. We've included the main perks the account offers, though don't be swayed by a freebie if it'd mean a lower overdraft...
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 |
HSBC | £1,000 in year 1, up to £2,000 in year 2, then up to £3,000 | N/A |
Lloyds | 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 | Choice of 12mth Amazon Prime Student membership, 4yr National Express Coachcard or a 4yr Tastecard |
Royal Bank of Scotland | £500 in term 1, then up to £2,000 for the rest of your time at uni | Choice of 12mth Amazon Prime Student membership, 4yr National Express Coachcard or a 4yr 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 |
Last updated March 2021 |
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...
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.
You shouldn't spend more than you earn.
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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