How to choose the right student account

A-level results are finally out which means the countdown to university is on for those who’ve achieved the grades they needed to get in.

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But there’s plenty of financial swotting up to be done before you head off to uni, not least when choosing a student account.

If you’re feeling a bit baffled about which student account is best for you, don’t panic, here are a few dos and don’ts to help guide you…

DO choose an account with a decent overdraft limit

The vast majority of students will need to borrow to cover costs while they are studying, so a large interest-free overdraft will usually be your top priority when picking a student account.

Some banks offer a tiered overdraft limit, depending on your year of study.

HSBC, for example, offers a guaranteed interest-free overdraft of £1,000 when you open your account, and you can then request an increase of up to £2,000 in year two and £3,000 in year three*.

Similarly, Nationwide Building Society’s FlexStudent account  offers an interest-free and fee-free overdraft of up to £1,000 in the first year. In the second year you can request an increase to £2,000, and in the third year you can request an overdraft of up to £3,000.**

To qualify, you’ll need to pay in £500 per year of study across two or more transactions and maintain a good credit record.

NatWest’s student account, meanwhile, offers an interest-free overdraft of up to £500 in the first term, and up to £2,000 after that.

Santander’s student account has lower overdraft limits, offering up to £1,500 interest-free for three years, or up to £2,000 if you’re on a five-year course.*** To qualify, you’ll need to pay in at least £500 a term and register for online banking.

Halifax’s student account also offers a fee-free planned overdraft of up to £1,500 for the length of your course, plus an extra year after you graduate, up to a maximum of six years.****

Bear in mind that all overdrafts are subject to status and approval, and your chosen bank or building society will run a credit check before they offer you an account. It’s therefore a good idea to check your credit score before you apply to see how likely you are to be accepted.

Once you’ve been accepted, make sure you don’t go over your overdraft limit. If you do, not only could you hurt you credit score, you’ll also pay a hefty fee. Santander, for example, charges £5 per day if you go into an unarranged overdraft (capped at 10 days per month).

DON’T base your decision on freebies alone

When choosing a student account it’s best not to solely base your decision on the freebies offered.

Lots of these can seem really tempting, but it’s vital to look at what else the account offers before making your decision. Of course, if it’s a toss-up between two accounts, the freebies on offer might help sway it for you.

Here’s a quick look at what’s available:

  • Santander is offering a four-year 16-25 Railcard which entitles you to a third off rail costs, so long as you pay in £500 or more each term and register for online banking.
  • HSBC is giving away an £80 Amazon gift card and 12 months membership of Amazon Prime Student when you open a student account before 31 December, 2018.
  • NatWest is offering a choice of either an Amazon Prime Student membership for a year, a third off coach travel with National Express for four years, or a tastecard which is valid for four years, so long as you sign up to online banking and select to receive paperless statements.

DO consider an account that pays interest

Not many students are lucky enough to stay in the black when they are at uni, but if you think you will be able to, then you’ll want an account which will also pay you interest when you are in credit.

Santander’s student account, for example, is one of the most competitive. It offers 1.00% AER (variable) on balances of between £100 and £200, 2.00% AER (variable) on balances of between £200 and £300, and 3.00% AER (variable) on balances of between £300 and £2,000.

To qualify you must pay in £500 or more each term and register for online banking.

Meanwhile, Nationwide’s FlexStudent account pays 1.00% AER (variable) on balances of up to £1,000, and you’ll also be able to earn cashback on some of your purchases.

HSBC doesn’t offer in-credit interest on its student account, but you can open a linked regular savings account paying 3.00% AER fixed for 12 months.

DON’T choose the bank with the nearest branch

Although it’s a good idea to check where the nearest banks are to where you will be living as a student, this shouldn’t be the deciding factor when picking an account.

It’s much better to choose an account that will suit your needs even if it’s offered by a bank which is a bit further away, particularly as you can withdraw cash from most banks' ATMs and you can usually register for online banking.


*Representative example (assumed overdraft £1,000): 0% EAR variable.

** Representative example: If you use an arranged overdraft of £1,200 the amount we will charge you is 0p per day (variable).

*** Representative example: 0% EAR (variable) arranged overdraft. No arranged overdraft usage fees apply. Assumed arranged overdraft credit limit £1,200. Actual amount may differ.

**** If you use a Planned Overdraft of £1,200 on your Student Account, then we’ll charge you a daily overdraft fee of 0p.


Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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