Allows you to dip into the red without penalty. Most banks offer interest-free overdrafts, but limits vary and need to be arranged in advance
A student bank account is a current account designed for students in higher education in the UK.
They work the same way as standard current accounts but usually come with tailored features such as larger interest-free overdrafts, cashback, and perks such as discounted or free railcards and shopping vouchers.
Interest-free overdrafts can be helpful when managing your student finances, allowing you the flexibility to go into the red without penalty
Banks want to attract new customers when they are young so the perks may be better than those offered on standard accounts
Student bank accounts offer smart banking facilities and online access making it straightforward to handle your finances from anywhere
You may find it difficult to get a student bank account if you’ve a poor credit rating because of past debts. If declined, you may have to opt for a basic bank account instead
International students might not be eligible for a UK student bank account with an interest-free overdraft
Your current account terms are likely to change after you graduate. You could lose some perks, although not always, and you may be required to gradually reduce your overdraft
Banks want student customers as there’s a good chance they will stick with the same bank long after they graduate. To lure students in, some banks offer cash, Railcards and free subscriptions to popular services. But if you’ll need to borrow money while at university, the amount of interest-free overdraft is the thing to focus on – the amount of borrowing you’ll be offered at 0% interest normally increases with each year of study."
Once you’ve graduated from university, your student account will convert into a graduate account, which is similar to a standard current account. Your existing student overdraft may be transferred over to your new account (meaning it will stay at 0% interest for a few years) and you may be able to apply for an arranged overdraft limit on top. In some cases, the bank may ask that you start to reduce your agreed overdraft limit over a period of time, depending on your work and income status.
When you apply for a student account the bank will conduct a credit check to see how well you’ve managed credit in the past. If you have missed any debt repayments you may find it difficult to be approved for a student account.
If your student account application hasn’t been approved, a basic bank account may be an option. You'll still be able to withdraw and deposit money, but you won’t be offered an overdraft or cheque book.
Opening a student bank account is straightforward, as follows:
Search to compare accounts taking not of features such as interest-free overdrafts or incentives to sign up
Once you’ve chosen your account, click through to apply online
You’ll need to provide ID, including proving that you’re a student, or you’re about to become a student
Once approved, you’ll be sent your account details and a debit card to get started
There isn’t a specific time you should set up your student account, but you may want it ready to go for when you start your course. That way, you’ll have access to all the features of a student account when you begin your studies and know where you’re at with your finances – particularly if you’ll need access to an overdraft. You’ll need to provide proof of your student status when you apply, so it may be worthwhile to set up your student account as soon as you’ve confirmed your place at university.
To open a student bank account, you’ll need the following information to hand:
Proof of ID: Typically photo ID such as your driver’s licence or passport
Proof of address: Bank statement or recent utility bill
Proof of student status: Your UCAS offer letter or letter of acceptance from university
Most banks will allow you to apply online. But don’t forget to send off your supporting documents. When your new student current account is open, remember to update your Student Finance account with your new bank details. Your Student Finance Account is the hub where you can see your statements and letters about your maintenance loan or grant from Student Finance England.
Depending on the student account you have and when you’re due to graduate, you may be able to increase your authorised 0% overdraft limit. Whether you can increase your overdraft limit will depend on your bank’s terms and lending criteria, as well as your borrowing history and financial situation. If you’re looking to increase your overdraft limit, contact your bank for more information.
It’s a good idea to check your account statements regularly, because this could stop you going into your overdraft without knowing. It can also be a good way to double check whether there are any transactions you don’t recognise.
Look for a provider with good customer service, because you never know when you’ll need to call them up or go into a branch to fix an issue.
Remember to be careful with your PIN and account details; you should keep this information safe and protected. Remember, your bank will never ask you to reveal details like your PIN, either on the phone, in person or through an email.
Your bank will almost certainly have an app that lets you manage your account online, and some may even be based on their app. This is excellent for quick and easy money management.
Each bank has different ways of transferring money. Some require you to use a card reader when transferring any sum of money, while others only use it for transactions over a set amount.
Other banks do not use card readers at all, so if money transfers are something you might be doing a lot of, it’s worth checking the policy details to see how easy it is to make payments on the go.
If your current account comes with benefits such as air miles, you might want to check whether you really need them. For example, if you’re not a frequent flyer, is an air miles bonus worth the extra cost?