Look after the pennies...

This guide has everything you need to know on what banks are offering this year with their student accounts, as well as what you should look out for when applying for one.

Why do I need to get a student bank account?

The main difference between a student account and a standard current account is the interest-free overdraft offered. It is wise to open a student account before you start university, especially if you are applying for a student loan as the money will be paid directly into your bank account and it can be tricky to change accounts after you arrive.

Most banks offer 'freebies' such as vouchers to entice you into opening an account with them. It's important to look past these freebies and focus more on the long-term benefits but if you're stuck between which bank to choose, remember that a 16-25 Railcard could be more useful in the long-term than say, an Amazon voucher.

A lot of students find that they need to use their overdraft at some point, so it's best to get an account with the highest interest-free overdraft. The full amount is never fully guaranteed however, so unless you have a brilliant credit score and lots of money coming in regularly you may want to find an account that is more likely to offer the full amount, even if it isn't the highest on the market. You should also always check the fine print to see if there are any charges in the event that you go over your overdraft limit.

What banks are offering (2015)

What bank should you go with this year? Take a look at what the major UK banks are offering with their Visa debit student accounts this year:


  • £200 interest free overdraft upon opening the account
  • Up to £2,000 interest free overdraft by second year
  • Continuing interest-free overdraft after graduation
  • £1 daily fee for overdrafts that are between £2,000 and £3,000
  • Maximum £3,000 at a variable annual interest rate (traditionally around 8.9%)
  • Mobile banking through downloading the smartphone app: 'Barclays Mobile Banking'
  • Free SMS text alerts

More information on Barclays' website


  • £1,000 interest free overdraft upon opening the account
  • Maximum £3,000 interest free overdraft from first year
  • One further year of interest free overdraft after graduation
  • 0.1% of in-credit interest
  • Cashback extras scheme lets you earn back money on some purchases
  • New banking app for iPhone and Android users
  • Free SMS text alerts

More information on Halifax's website


  • £60 Amazon voucher
  • £500 interest free overdraft upon opening the account
  • Maximum £3,000 interest free overdraft, but rarely used - HSBC operates a tighter overdraft service than any other large bank; their policy is to lend around the minimum guaranteed (£500-750). This means it has the lowest overdraft arrangement of any student bank account.
  • High in-credit interest rate of 2% on first £1000 (year one only)
  • Won't let you spend past arranged limit - so no nasty unexpected fees!
  • PayM service available: This allows you to pay friends and family with just their mobile number
  • Online budget calculator
  • Free SMS text alerts

More information on HSBC's website


  • Free three-year NUS extra card
  • Interest-free overdraft of £500 upon the account opening
  • Maximum £1,500 interest-free overdraft through years one to three
  • Maximum £2,000 interest-free overdraft from years four to six
  • Internet banking, PhoneBank and mobile banking

More information on LLoyds' website


  • Free National Express Coach Card worth £27 - 1/3 off coach travel IF you sign up to paperless statements
  • Up to £500 interest free overdraft in your first term, increasing up to £2,000 in term 2 (subject to you depositing at least £750 every six months and making at least three debit transactions every month)
  • Mobile phone top-ups at cash machines
  • Emergency cash up to £300 if your card is lost or stolen

More information on Natwest's website


  • Free National Express Coach Card worth £27 - 1/3 off coach travel IF you sign up to paperless statements
  • Up to £500 interest free overdraft in your first term, increasing up to £2,000 in term 2 (subject to you depositing at least £750 every six months and making at least three debit transactions every month)
  • Mobile phone top-ups at cash machines
  • Emergency cash up to £300 if your card is lost or stolen

More information on RBS's website


  • Free four-year 16-25 Railcard when you open a new account
  • Up to £1,500 interest-free overdraft (provided you deposit £500 into your account each term), up to £2000 if you stay on for 4-5 years
  • Only interest free overdraft if arranged. If not already arranged then a £5 fee will apply daily if in overdraft (for max 10 days a month)
  • Continuing interest-free overdraft for 3 years after graduation with a 'Graduate Account'.
  • 3% interest paid to you on balances from £300 up to a maximum of £2,000.

More information on Santander's website

The Co-operative Bank

  • Guaranteed £1,400 interest free overdraft in year one increasing to £2,000 in year three. (Must deposit £300 straight away and debit in main source of income (i.e. student loan) every term.
  • Unlike other banks, majority of students get full £2,000 overdraft in third year
  • Bank has an ethical policy determining where it invests your money.

More information on The Co-operative Bank's website


  • Overdraft structure exactly the same as Lloyds, with a maximum of £1,500 starting at £500
  • Internet and mobile banking
  • £10 overdraft buffer

More information on TSB's website

What you need to open an account

The vast majority of freshers open student accounts
To open a student account you may need to produce:
  • A copy of your student loan financial assessment form
  • Proof that you are in fact a student (usually the AS12 letter from UCAS)
  • Photographic identification, e.g., passport, full driving license. Overseas students should produce their passport and letter of admission or enrolment from the university
  • Proof of term-time or home address. This should be an official document eg, bank statement, utility bill.

Points to consider

The difference between a credit and debit card:

It's important to stress the differences between using a credit card and a debit card - if you are not careful you could easily rack up a great deal of debt. It's almost always recommended to stick with debit cards unless you need money in an emergency (I.e. you need to pay something important and you can't take out a loan). All of the major UK banks that offer student accounts are typically based on a Visa debit card, but it is always good to check before signing up.

You can find out more about the difference between debit and credit cards by following this link.

Branch location and facilities:
  • Is my branch near enough for me to call in to discuss my finances?
  • Is there a cash machine on campus or close to where I live?
  • Can I use my cash machine card at other banks' machines without being charged?
  • Is there a student adviser? You will need a familiar point of contact who is sympathetic to students and aware of their financial situation.

Overdraft facilities:
  • What sort of interest free overdraft is available and how do I apply?
  • Do I need to attend an interview with the student adviser before an overdraft can be arranged?
  • Can I extend my overdraft limit and how do I do this?
  • What happens if I exceed my overdraft limit?
  • Always consult with your bank before going overdrawn outside of any pre-agreed limit, as banks often impose stiff penalty charges on unauthorised overdrafts.
  • Remember the bank may describe your overdraft as 'free' but you still have to pay it back so use it carefully. You might for example, be given an agreed overdraft limit of £1,000 in your first year, £1,250 in your second year and £1,500 in your third year, but this does not mean you will be allowed £3,750 in total.

Bank charges:
  • Does the bank charge for services? Most banks will not charge for their services whilst you remain in credit or stay within an agreed overdraft limit.
  • Will I receive interest on credit balances?

Graduate package:
  • Does my branch offer preferential terms to graduating students? (Most banks do this. These include cheaper overdrafts and possibly loans to consolidate overdrafts and other debts)
  • For how long after my course has completed can I expect to receive preferential student terms?

Things to ask your bank

  • What can the bank do to help out if my first loan installment is late?
  • What sort of credit card facilities does it offer?
  • Does it charge commission on travel money? (several banks do not charge students)
  • What savings facilities and incentives are on offer?
  • Is there telephone banking and/or banking via the internet?

If you get into trouble

You'll want to be able to withdraw cash easily and simply
Whichever bank you choose, bear in mind that you may need their support if you encounter a financial problem in the future. They will be more willing to assist you if you can demonstrate that you have a responsible attitude to borrowing and have not abused your account in the past. If you are ever in financial difficulty it is a good idea to contact the bank and discuss it with them. They'd rather have a responsive customer than someone slipping further into debt.

If you are having financial difficulty, you should consult these steps:
  • Let your bank know as soon as possible. They may be able to help.
  • If you are in severe financial difficulty you can apply for Access Funds and hardship loans. Check with your college for more details.
  • You can get free confidential professional money advice from the National Debtline on 0808 808 4000 or from the Consumer Credit Counselling Service on 0800 138 1111.

See Also

Student Budgeting

Student Finance Tips

TSR Freshers Pack