Choosing and opening a student bank account

Student bank accounts

Starting uni soon? Read on for guidance on choosing a student bank account, including all the deals available for 2021

Why should you get a student bank account?

If you already have a bank account, you may not think you should bother with a student one – but that would mean missing out on an interest-free overdraft. This is probably one of the only times you’ll ever get this, so it’s worth taking advantage!

Going large and getting the biggest interest-free overdraft you can find will give you financial breathing space, which is never a bad thing. That said, don’t forget that some banks are more likely than others to dish out their maximum overdrafts, so you might want to choose an account where there’s a better chance of getting the full amount even if it’s not the highest advertised on the market. TSR’s money forum is a good place to do your research into this.

It makes sense 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 a drag to change accounts when you’re juggling your studying with a hangover.

Before you sign up to anything, check the small print. In particular, you’ll want to know about any charges for going over your overdraft limit before it happens.

What banks are offering (2021)

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

Barclays

  • £500 interest free overdraft upon opening the account
  • Up to £2,000 interest free overdraft by second year
  • Up to £3,000 interest free in third year and beyond
  • Access to Perlego – an online library of academic and non-fiction titles
  • Use the app to check when regular payments will leave your account and compare how much you spend month by month.
  • Free, fast and secure payments to friends and family with the app
  • Pay with your phone or smartwatch using Apple Pay or Contactless Mobile.

Halifax

  • An interest-free overdraft of up to £1,500 for the length of your course plus an extra year after you graduate, up to a maximum of 6 years. (Note: overdrafts are repayable on demand and subject to status)
  • Contactless payments
  • Manage your money online, by phone or in branch
  • Cashback when you spend once registered for online banking and you've activated Cashback Extras
  • Monthly credit interest on any credit balance 0.10% AER (0.10% gross) variable
  • Eligible for the Save the Change feature which rounds up your payments to the nearest pound and transfers the difference into your savings account.

HSBC

  • £1,000 interest-free overdraft with option to increase as studies progress, up to £3,000 by your third year
  • Get £80 plus an Uber Eats voucher or ASOS Premier for a year if you make five debit card transaction within a month of opening your account
  • Up to £500 on a student credit card
  • Mobile banking app
  • Student guides to help you stay on top of your finances.

Lloyds Bank

  • Interest-free overdraft of up to £1,500 in years 1-3 and up to £2,000 in years 4-6
  • Get up to 15% cashback with Everyday Offers when using your Visa debit card at retailers including the Co-op and Costa
  • Eligible for the Save the Change feature which rounds up your payments to the nearest pound and transfers the difference into your savings account
  • Contactless debit card, Apple Pay and Android Pay
  • Mobile banking through their app.

NatWest

  • Up to £500 overdraft in first term, and up to £2,000 after that 
  • Get £50 cash plus a four-year tastecard if you register for online or mobile banking and opt for paperless statements within 30 days of opening your account
  • 24/7 online and mobile banking
  • Free text and email alerts
  • Option to temporarily lock your card if you can't find it and, if it shows up, instantly unlock it again.

RBS

  • Get £50 cash plus a four-year tastecard if you register for online or mobile banking and opt for paperless statements within 30 days of opening your account
  • Overdraft up to £500 first term, rising up to £2,000 after that
  • 24/7 online and mobile banking
  • Free text and email alerts
  • Option to temporarily lock your card if you can't find it and, if it reappears, instantly unlock it again

Santander

  • Free four-year 16-25 railcard, saving you 1/3 on rail travel
  • £1,500 interest-free overdraft, increasing to a maximum of £2,000 in year five 
  • Up to 15% cashback at a range of major retailers
  • Mobile and online banking 
  • Contactless mobile payments with Apple, Android or Samsung devices.

Co-operative bank

  • Interest-free overdraft starting at £1,400, and that you can request to increase each year
  • Ethical banking: the Co-operative bank has committed to zero waste to landfill by the end of 2020
  • One year after you graduate to pay off your overdraft, without any interest
  • Online banking and mobile app.

TSB

  • 5% interest on balances up to £500, paid by the 10th working day of each month
  • Interest-free overdraft of up to £1,500, starting with £500 for the first six months
  • Option to apply for a student credit card
  • Use Apple Pay and Google Pay
  • Online banking and mobile app.

Nationwide

  • Up to £1,000 overdraft in first year, which you can apply to increase in second year to £2,000 and to £3,000 in third year.
  • Mobile payments and contactless
  • Apple, Google, Samsung and Paym contactless payments
  • Free SMS alerts
  • Chequebook available on request
  • Graduate account also available.

What you need to open an account

Check with your chosen bank, but you'll probably need to take some combination of the following:

  • 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, eg 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.
  • Remember that if you are opening your student account from your uni halls or house, you won't be able to use you driving license as proof of address unless you change the address from your home one.

Things to think about

Overdraft facilities:

  • Find out what happens if you exceed your overdraft limit.
  • Always consult with your bank before going overdrawn outside of any pre-agreed limit, as banks often charge you a lot for unauthorised overdrafts.
  • Remember the bank may describe your overdraft as 'free' but you still have to pay it back so use it carefully. For example, you’re 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.

General things to consider:

  • Check out how far your local branch is from your uni/accommodation. There may be times when you need to go there.
  • Find out where local cash machines are so you can get cash when needed (a bit of emergency cash is always handy in case of contactless fails).
  • Look into whether your bank has a student advisor you can chat to about your financial situation. You may need to have a meeting with one before your overdraft is arranged.
  • Find out if your branch offers good deals to graduating students, many banks do and these include cheaper overdrafts and possibly loans.
  • Does the bank charge for their services?
  • Will you get interest on credit balances?
  • Does it charge commission on travel money? (several banks do not charge students)

If you get into trouble

Whichever bank you choose, remember that you may need their help if you have money troubles later on, and they’ll likely offer you as much support as they can. If you are ever in financial difficulty it is a good idea to contact the bank and discuss it with them. 

If you are having money problems, remember 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 university access funds and hardship loans. Check with your university for details.
  • You can get free confidential professional money advice from the National Debtline on 0808 808 4000 or from the StepChange Debt Charity on 0800 138 1111.
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