Tried and tested tips on choosing a student bank account

Unless you deal solely in cash, if you are heading to university this year, you’re going to need a bank account. And the range on offer for 2014 isn’t at all bad.

But as well as just rounding up what accounts are available, we thought we’d provide a little more help from those in the know.

Jack Donkin, Sophie Kanal and Laura Gridley all have two things in common; they have just completed their uni freshers’ year and are heading into year two, and they have completed a spell of work experience at MoneySuperMarket towers!

So here’s their tried and tested tips on choosing a student bank account:

Jack DonkinName: Jack Donkin, 19
Studying: University of West England
Degree: Marketing
Student current account with: NatWest

“I opted for NatWest’s student account. I’d love to say it followed a spell of thorough research but, the truth is, I’d been with NatWest as a kid and  I just upgraded.

But there were reasons why.

I really like NatWest’s technology – which, of course, I was already familiar with. Its slick mobile app has great user interface which makes it really easy to check your balance – even if it’s to remind yourself of how upsettingly low it is. And its Get Cash feature, which allows you to access cash from an ATM with your smart phone if you lose your debit card, is also a bonus. I also found that its online banking and mobile app never suffered any down time, which is great for nocturnals like me. 

NatWest also gave me a free year’s Tastecard (worth £70) when I upgraded, which offers  50% off or 2-for-1 across 7,000 UK restaurants – and it's doing the same this year. It’s a decent add-on for some but – personally – I never used it.   And it begs the question of whether any student should be eating out anyway? Read more on this in my previous article, 10 money mistakes I made in my first year at university. 

“NatWest also gave me a free year’s Tastecard (worth £70) when I upgraded”

NatWest’s Tastecard is a replacement for its 2011 welcome freebie, which was an annual 16-25 railcard (worth £30), that will save you a third on all UK rail travel.  Personally, I think that’s much more useful – especially if you are a frequent traveller home.

But this year, Santander is offering a FOUR-YEAR 16-25 railcard in its student package (worth £70).  And if you already have a rail card, HSBC is offering a £60 Amazon gift voucher and £70 off a Kindle Fire HDX – which can be used at the same time.

I do also find NatWest branches hard to come by. I was lucky to have one on campus but it had very restricted opening hours. That or my time-keeping was worse than I thought.

Top tip!

"If you are going to rely on your overdraft for spending, you’re best off choosing an account on this basis instead. HSBC and Halifax are both offering up to £3,000 interest-free this year for example.

But, whatever bank you are with, make sure you stick within your agreed limit as ‘unarranged borrowing’ is really going to sting. Santander charges £5 a day, for example – capped at five days within each monthly statement.

However, live within your overdraft boundaries and you are free to make all the student purchases you need – vodka, pizza, maybe even a textbook – without it costing a penny in interest. But never forget, you’ll still need to pay it back!”

Sophie KanalName: Sophie Kanal, 19
Studying: University of Nottingham
Degree: Psychology
Student current account with: Barclays

“This time last year, I was heading to Nottingham to start uni. But I found looking for the best student account a bit of a maze so ended up sticking with my existing bank, Barclays. In hindsight, though, it was probably the wrong choice.

My Barclays Student Additions Account came with a £200 interest-free overdraft that could be increased to £2,000 depending on how well you’d managed your account. It also came with a debit card, which you could choose to personalise with a picture of your choice (I didn’t) and a mobile banking app.

But it’s interest-free borrowing which is the gold dust for most students. Even if, like me, you are lucky enough not to always need your overdraft, it’s good to know you always have access to cash. And from this point of view – as Jack pointed out in his previous post – Barclays isn’t the best bet.

Also, while the Barclays baking app is handy and simple to use, I now realise that other banks have their own excellent apps too! 

Top tip!

"Not ALL students need an overdraft. And if you are lucky enough to be among them, this year some student accounts are offering in-credit interest. 

Santander pays 3% AER on balances between £300 and £2,000 while TSB offers 5% on balances up to £500. So don’t follow my lead. Shop around for the best deal for your circumstances and reap the rewards!”

Laura GridleyName: Laura Gridley, 19
Studying: University of Manchester
Degree: Economics
Student current account with: None. Regular account at Nationwide

“Last year when I was a fresher, I opted not to take a student bank account at all. I figured that with my student loan and cash I’d earned over the summer, I wouldn’t need the overdraft, which would be the main offering.  But, having learned about the range of student current accounts on offer this year, I can see what I’ve been missing out on!”

This year, I intend to take out a student bank account so I can take advantage of the extras that I’m entitled to, such as upfront freebies and interest-free borrowing. After all, if I DO slip into the red, the standard account I have now from Nationwide charges interest at18.9% EAR.

But which of the 2014 accounts should I go for?

Top student budgeting tips video

Weighing up what’s on offer, I have decided that Santander is the best bet for me – mainly for its free 16-25 four-year railcard. Living in Basingstoke – a four-hour train journey from Manchester – the cost of a return train ticket is, at best, £86.50.   With a railcard, this would be reduced to £57.10, making a £30 saving in one journey alone. And as I've only got two years left of uni, I can still use it after I've left.

With my savings dwindling, Santander’s interest-free overdraft of up to £1,500 in years one to three is a really good safety net.  You can apply for more in years four and five but, with my course being just three-years, this is plenty.

Finally, Santander’s in-credit interest of 3% on balances between £300 and £2,000 will also help. I get paid £1,200 a term in student loans which I could be earning interest on – even for just the short time it's in my  bank!”

Heading for a gap year instead? Check out Laura Howard’s 7 money tips.

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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