Student bank accounts

What is a student bank account?

A student current account is no different in operation to a normal current account, however, student accounts come with the added benefit of a free overdraft facility (effectively, extra money). The vast majority of student accounts come with online access, free cash withdrawals and direct debit / standing order facilities. Each bank has differing criteria on what makes a student, and qualifying conditions include where you are studying, as well as what you are studying (some banks even offer student banking facilities to college students). In most cases, you would need your UCAS offer letter when going to apply for your account, and you will need to confirm that your a href="/student-loans.html">student loan will be paid directly into the account.

How to choose a Student Bank Account

Since all student bank accounts come with a very large overdraft (which will need paying off eventually) you should look for the bank that offers the biggest and longest 0% APR overdraft facility. Be warned though, although they advertise these large overdrafts, they aren’t guaranteed. Don’t be disappointed when you don’t get access to thousands of pounds immediately you open the account. You also need to be aware that the overdraft is only free as long as you stay within the limits and the terms and conditions of the account are adhered to.

The banks will offer added incentives for you to take their account rather than their competitors. You should work out whether these incentives are as good as they look. The lure of a free gift may be appealing, but it is doubtful whether they offer value for money in the long run.

Go and open your student bank account before you set off for university, preferably with a parent in tow for advice. Whilst you are probably looking forward to getting away from the "oldies", they will have years of banking experience, and will know the questions to ask. Waiting until you get to university is a mistake, as the freshers fair will only have invited a limited number of the banks (most likely because of the incentives given to the organisers) and so you will not be able to make proper comparisons. Do consider things such as whether there is a branch close to your digs.

What happens to your student bank account when you graduate?

So you complete your three years of university and (hopefully) come away with a decent degree. Now you are faced with up to £3000 worth of extra debt, on top of the student loans that need repaying. Furthermore, interest is now being added as you are no longer a student. Don’t worry, all is not lost, some banks now have a graduate account, and allow you to switch your overdraft to them. It is a good money saving tip that you switch to a graduate account upon graduation as this will give you up to another 3 years interest free (or in some cases at a lower interest rate) in which to pay back your borrowing.

Some typical examples of Student Bank Accounts

At the time of writing this guide, we found the following examples of what was on offer at some of the high street banks:

Barclays Bank up to £2000 overdraft with a reduction on Orange Broadband

HSBC Bank up to £2000 overdraft with 2 years free travel insurance, free Talk Mobile Sim and discounts at some High Street Shops

Royal Bank of scotland up to £2750 overdraft with a 2 for 1 cinema card, USB memory stick and discounts at some high street shops

Halifax up to £3000 overdraft with commission free currency and 25% discount on AA breakdown insurance

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Updated on 29th February, 2012

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