Which student account should you go for?

Getting the right student account could mean the difference between stress-free studying and beans on toast every single night, so it's important to choose carefully.


Here’s a quick look at what’s on offer…

“I need an interest-free overdraft”

For many students, a decent overdraft is their number one priority.

Both HSBC and Halifax offer an interest-free overdraft of up to £3,000 on their student accounts while you are studying.

You will still qualify for your HSBC overdraft if you stay on to do a post-graduate degree, and Halifax offers the same overdraft for up to a year after you’ve graduated.

However, while a £3,000 interest-free overdraft sounds great, this isn’t guaranteed.

How much you are offered will depend on your financial circumstances and how well you’ve managed your account in previous years.

This also applies to the overdraft limits on the accounts below:

• Co-op Bank offers a 0% overdraft of up to £1,400 in the first year, £1,700 in the second and £2,000 in the third year (you must pay in £300 to activate the overdraft).

• NatWest/Royal Bank of Scotland offers an interest-free overdraft of up to £500 in term one and up to £2,000 after that (you must pay in at least £750 every six months and make at least three debit transactions every month).

• Barclays offers a fee-free overdraft of up to £500 in term one, up to £1,000 in term two, up to £1,500 in term three and up to £2,000 in term four.

• Santander offers a 0% overdraft of up to £1,500 in years one to three, and then up to £2,000 if you stay on to year five (you must pay in £500 to increase your overdraft limit and continue to pay in at least £500 each term).

• Lloyds and TSB offer an interest and fee-free overdraft of up to £1,500, starting with £500 in the first six months, £1,000 from month seven and up to £1,500 from month 10.

T&Cs apply to all deals.

All student account providers offer online banking and mobile apps, and most allow you to transfer money to your friends using just a mobile number

Watch out for charges for going over your agreed overdraft limit (and in to ‘unplanned’ overdraft territory) – Santander, for example, will charge you £5 per day (capped at 10 days in each monthly statement period), while Halifax charges 24.2% EAR.

“I’d like to earn interest when I’m in the black”

It’s unlikely you’ll be carrying a credit balance for long while you’re at uni, but you don’t have to have a large balance to start earning interest - some accounts will pay interest on balances from just £1.

• TSB offers 5.00% AER (variable) on balances from £1 up to £500.

• HSBC offers interest on balances up to £1,000, but at a lower rate of 1.50% above base rate (currently 2.00% AER variable).

• Santander offers tiered rates of interest depending on the size of your balance. You’ll earn 1.00% AER (variable) on balances above £100, 2.00% AER (variable) on balances above £200 and 3.00% AER (variable) on balances between £300 and £2,000 – handy if you’re likely to have a larger balance in your account.


“I’m looking for something extra”

Many student accounts also offer a number of incentives for signing up.

Although you shouldn’t base your decision solely on the best freebies, if it’s a toss-up between two accounts, the extras on offer might help sway it for you.

If you plan to visit your family or friends by train during your time at university, Santander is offering a free four-year 16-25 Railcard which gives you a third off rail travel (a Railcard normally costs £30 a year or £70 for three years).

You will need to pay in at least £500 per term to qualify (this includes your student loan).

Alternatively, NatWest/RBS is offering a free National Express Young Persons Coachcard for four years (normally £10 a year, or £25 for three years) which gives you a third off coach travel, as well as 10% off travel to festivals.

You’ll need to set up online banking and receive paperless statements to qualify.

If neither of these options appeals, HSBC is offering a £60 Amazon gift card if you open your account before October 31, 2015.

Lloyds, meanwhile, is giving away a NUS extra card for three years (normally £32) if you open your account before October 11, 2015. This will give you discounts at a range of high street retailers.

In addition, its Everyday Offers scheme allows you to earn up to 15% cashback at various retailers. You’ll need to activate the offers you want through online banking and then spend with your Lloyds debit card to qualify.

Terms and conditions apply to all offers.

“Is there anything else I should know?”

All student account providers offer online banking and mobile apps, and most allow you to transfer money to your friends using just a mobile number.

But NatWest/RBS also offers a Get Cash service through its app which allows you to withdraw money without using your bank card – ideal if you’ve left your wallet at home or you lose your card.

And if you’re concerned your spending habits could get out of control, Lloyds’ Money Manager could come in very handy as it allows you to keep track of your money and stay on top of your spending. 

Compare all student accounts.

If you are also looking to apply for a credit card, visit our student credit card guide with tips on what to bear in mind at each stage of the application.

Friend or relative heading off to uni? Help them get organised by clicking here and sending this to them by email.

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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