A guide to student overdrafts and how you can get one
One of the most sought-after benefits of a student bank account is an interest-free overdraft to help fund your studies. But are they really the best option? And what are the risks? Our guide explains all
Key takeaways
Student overdrafts are designed to offer an interest-free buffer for students
Apply as soon as your place at university or college is confirmed as autumn is a peak time for banks processing new accounts
Always check what fees apply, if any, and if these will change when you graduate
Extra perks such as cashback and free rail cards may also be thrown in with your student bank account

What is a student overdraft?
A student overdraft is a financial arrangement offered by banks to students in the UK. It allows you to withdraw more money from your student bank account than you have on your balance, up to a fixed limit.
Repayment terms are typically generous, with most banks allowing students to repay their overdraft after they graduate, giving them time to secure employment and stabilise their finances.
What are the perks of interest-free overdrafts?
Many banks offer interest-free student overdrafts, meaning you won’t be charged for going into the red.
They do this as an incentive to attract customers when they are young, knowing that we often stick with the first bank we open an account with, despite it being easier to switch (and get rewarded for doing so) than ever before.
This can make student overdrafts the cheapest form of short-term borrowing available to students.
Who is eligible for a student overdraft?
To be eligible for a student overdraft, you typically need to be a full-time higher education student at a recognised UK university or college.
Banks will require proof of your student status, and the eligibility criteria may vary, so it's essential to check the specific requirements of each bank.
When does an overdraft need to be repaid?
An overdraft on your student bank account can be a useful lifeline. But it is also a temptinig way to borrow ‘free’ money. However, borrowing should always be approached with caution, as the funds will need to be repaid.
Banks can also withdraw the overdraft facility at short notice, so it's crucial to use this resource responsibly. When considering a student overdraft, it's vital to review the terms and conditions.
These will outline the overdraft limits, the repayment expectations, and any charges that may apply if you exceed your limit or fail to repay on time.
How does a student overdraft impact my credit score?
A student overdraft can affect your credit score, although this is usually not a concern unless you exceed your overdraft limit or fail to make timely repayments.
To keep on top of your credit health, you can check your credit score for free with our Credit Score, where we also provide helpful tips on how to increase it.
What happens to an overdraft after graduation?
After graduation, the terms of your student overdraft will likely change. Banks may start charging interest on the overdraft amount, so it's important to have a plan in place for repaying the borrowed funds.
This can help you avoid potential financial struggles that might be visible to future lenders.
What are the best alternatives to overdrafts?
If a student overdraft doesn't seem like the right fit, there are alternatives. They include the following:
Increasing your student loan
sSome banks offer credit cards designed for students, but these generally tend to be a more expensive option
Signing up to a part-time job
Applying for bursaries, scholarships, and grants
Using savings, if available
How to compare accounts and overdrafts
There are lots of student accounts to choose from, and many offer overdrafts. The best way to see what is available is to compare student bank accounts with a website like MoneySuperMarket. This comparison can highlight the different overdraft limits, fees and additional perks that come with each account.
Other useful guides
For more information on managing your finances as a student, consider exploring the following guides:
Compare student bank accounts with MoneySuperMarket
Choosing the right student bank account with an overdraft option can be a straightforward process. It then just takes a few moments to make your choice, click through to compare student bank accounts and apply online.