getting through clearing, finding accommodation, buying text books, and putting together killer
Spotify playlists, one of the most important considerations for students is making sure you have the best possible bank account. One that comes with a student-friendly overdraft, dedicated apps, and other benefits that match your university lifestyle.
For many this will be the time first dealing with a financial institution, and while it may not exactly be an exciting prospect it’s one well worth getting right. And that’s where we come in. We’ve done the research for you, so here are the best student bank accounts available right now.
What do student accounts offer?
Banks have recently decided to focus on attracting students. This is because they know they’ll be moving onto high paying jobs in a short space of time, and want to count on them not switching banks once they do so.This means there’s a surprising amount of choice open to students.
To incentivise potential customers, banks and building societies now offer a number of deals on their student accounts. These enticements tend to break down into three areas – 0% overdrafts, in-credit interest, and freebies. But which one is really the best deal in the long run? Or at least over three years?
Overdrafts are arguably the most useful as they represent, essentially, a free loan. With not much in the way of a fixed income it’s easy to go into the red if you’re not careful, and this can lead to expensive charges or bills not being paid. Having a safety net is always a good idea, so a prearranged overdraft that doesn’t charge for the privilege or apply interest can be a lifesaver.
Of course this isn’t much use if you just spend up to the limit straight away, as you’ll then be liable for hefty charges if you go over, and may even have the overdraft revoked if you can’t be trusted with it. But, treat the service with respect and you’ll have peace of mind when it comes to your finances.
As with any financial agreement, you’ll need to read the fine print before signing up. Some bank accounts offer overdrafts of sizable proportions, say several thousand pounds, but have an asterix next to the amount or the fateful words ‘up to’ as a prefix. These often mean that the number displayed in the big font isn’t necessarily what you’ll receive straight away.
A number of banks have overdrafts that increase in size across the three years of your study, or are subject to some kind of qualification, so be sure to examine this thoroughly before taking the plunge.
It’s also worth remembering that once you finish your studies you’ll most likely be converted to a normal current account and required to payback your student overdraft. So be sure you know the conditions laid down for this too. It might seem like a long way down the line, but you’ll get there faster than you think.
Another way banks try to entice new customers is by rewarding them for staying in credit. They do this by paying interest on the amount you have in your account. It’s a good idea, although the nature of student finances mean that this might not exactly be much of a reward, as you could well find yourself hitting the overdraft on a regular basis.
The most eye-catching of all the incentives are the freebies. These range from
Amazon vouchers to
Railcards, and give the new customer the sense of being immediately rewarded. The truth is they are rarely worth that much to a student in the long run, and you should definitely take the time to work out how much money they’ll save you over three years when compared to something like an overdraft.
Which incentive is the best?
Pretty much all of the financial advice we’ve researched has come down firmly on the side of 0% overdrafts. The mixture of security and flexibility it gives students outweighs the rewards of the other two in most cases, so searching for the account that offers the best terms on overdrafts would be the sensible move.
Of course, depending on how you manage your money, one of the other offers might present the best value. Just be sure to do the research before you’re swayed by any of the shiny things.
All of the bank accounts we looked at offer fee-free overdrafts (subject to status) so it’s not necessarily a case of one incentive or another. As we stated above though, it’s worth delving a bit deeper to see how much you’ll actually be given in terms of a limit, and whether any of the other bonuses are also offered by the same account.
To help you in your investigations we’ve included a section further down the page that pretty much covers all the major Student Accounts currently available and what they have to tempt propective customers.
But first, technology.
Best student bank accounts: Apps and gadgets
Bank accounts are much more high-tech than they used to be. Online banking is a given these days: no-one wants to traipse to a branch when you can move money, check balances, or make payments at any time of the day or night from your PC.
But there are of course a number of banks which have apps for smartphones that allow these services to be used even more easily and on the move. Many are also now signed up to support Apple, Google, and Samsung payment methods, so you can pay for products with your smartphone.
Barclays also offers gadget and travel insurance via its Tech Pack and Travel Pack add-ons.
The Tech Pack costs £12.50 per month and covers up to 4 phones and an unlimited number of gadgets worth up to £1,500 (see our full guide on the
best phone insurance). Meanwhile,
the Travel Pack, also £12.50 per month, offers worldwide travel insurance.
There’s also an instant payment app called
Pingit (for both
iOS) which allows you to quickly transfer money to friends or family via their mobile number. Handy for settling up those student bar bills.
Read more about Pingit.
If you sign up the
Lloyds Student Account you’ll receive a fee-free overdraft facility that begins at £500 for the first six months, then goes up to £1000 for the next three months, and finally £1500 in the tenth month. This remains the maximum amount for the next two years, but if you enter a fourth year of study the level can raise to £2000 until your sixth year, all subject to status of course.
Lloyds does up to 15% cash-back too with select retailers, plus its rather unique ‘It’s on us’ feature randomly selects users who’ve spent up to £500 on something and refunds them the money. You can see more about these benefits on
Lloyds’ dedicated page.
International students can see details on Lloyd’s international accounts
Perhaps the most eye-catching offer is from the
HSBC Student Account. There’s the £1000 fee-free overdraft facility, which can be increased to £2000 in year two, and £3000 in year three (depending on status), plus the option of a Student Credit Card
with a £500 limit.
Mobile banking is well supported too, with
Apple Pay and
Google Pay apps making payments easy with your smartphone. HSBC also offers 3% interest on money students put away in its
Regular Saver plan.
On top of all this, HSBC also offers freebies and discounts with up to 38% off cinema tickets, 30% off HP computing and Apple Education discounts among other things.
See all the student exclusives here.
Natwest’s Student Bank Account offers a £500 fee-free overdraft, which can rise to £2000 during your studies. There is support for both
Google Pay and
Apple Pay, plus a few interesting additional services.
Paym, the mobile payment app, is a handy feature that lets people send you money via your phone number rather than bank details.
NatWest also has its
Get Cash facility via its mobile banking app (download it for
iOS) that allows you to withdraw money from cashpoints even if you’ve forgotten your card. The way this works is that the app generates a special code that then works with the ATMs to give you access to your money. That’s pretty cool. You can see all features of Natwest’s mobile banking app
Plus the Student Account also lets you choose from one of three perks: either pick up a free Amazon Prime Student membership, National Express Coachcard or a
tastecard membership. A Student Prime membership typically costs
£39 per year though comes with a free 6 month trial period (regular memberships only get 30 days – see our
full guide to Amazon Prime Student). The National Express Coachcard, typically £12.50 a year, is valid for 4 years and gets you a third off travel fares and 15% off travel to events and festivals. Finally, tastecard gets you 50% off thousands of participating restaurants all through the week at places like Pizza Express, Frankie & Benny’s and more.
TSB is a bit more generous than its counterparts in terms of the in-credit interest it offers. For those who have £500 in their account the bank will pay 3% interest each month, which could come in handy. It also has a fee-free overdraft facility that goes ‘up to’ £1510. This starts at £500 for the first six months, can be increased to £1010 for months seven through nine, and finally can be extended to £1510. As always, this is subject to status.
Santander’s Student Account takes a little more work than some of its rivals. New applicants automatically receive a £250 fee-free overdraft when they open an account and pay in at least £500. This increases up to £1500 if you pay in at least £500 each academic term. As you’d expect, terms and conditions apply.
If you keep money in your account then you’ll also be eligible for in-credit interest, with the current rate being 3% for amounts from £300 up to £2,000.
Santander supports a
number of mobile payment options, including Apple Pay, Google Pay, and Samsung Pay. Santander also offers the
Paym feature that allows payments to be made to and from accounts just by using someone’s mobile phone number.
As you’d expect it offers fee-free overdraft. This one starts at £1000 the first year then increases to £2000 for the second year and £3000 for the third. Nationwide also offers 1% in-credit interest for balances up to £1000.
The account has decent support for mobile payment and account management, with dedicated apps alongside Google Pay, Samsung Pay, and Apple Pay facilities. There’s also the Simply Rewards scheme which offers cash back on various purchases.
As you can see the range of accounts available to new students is wide and varied. Choosing the best one for you will come down to the things you value and how you want to manage your money. Be sure to take your time, weigh up the offers, and see which one gives you the most of what you want. For us, Barclays, HSBC, and Nationwide are worth checking out for its £3000 fee-free overdraft offers – plus the first two offer a good blend of features and benefits too.
Martyn has been involved with tech ever since the arrival of his ZX Spectrum back in the early 80s. He covers iOS, Android, Windows and macOS, writing tutorials, buying guides and reviews for Macworld and its sister site Tech Advisor.