Figuring out which is the best student bank account for you during your time at uni can be a difficult task. There’s lots of small print and complicated things to think about: interest free overdraft limits, charges, rewards and freebies.
Student bank accounts are designed to help you through University. The great news is banks offer students really great perks and sign up bonuses: everything from cash up front, free student railcards, shopping discounts, and even Amazon vouchers!
We put together our picks of the best student accounts available to students and everything else you need to think about when considering which bank to go for.
Revolut, Monzo, Starling, Chase & Monese… they’ve been around for a while and loads of students are opening accounts with them. Should you do the same? What’s so special about them These new digital banks don’t normally offer specific student bank accounts, but you shouldn’t necessarily right them off for that reason. Their standard current accounts come with various features that will benefit a lot of students. We’ve written more about this below, but for now you can check out the best digital bank accounts for students here.
Student bank accounts are bank accounts specifically designed for students in higher education.
They work just like any other current account, providing you with a debit card and letting you set up things like standing orders and direct debits.
Student bank accounts are tailored to help you in your life at university, offering students great benefits like interest free overdrafts, discounts on shopping and other freebies, like a free student railcard.
You will need to prove your student status when opening an account. Then once you’ve opened your new student bank account, update your Student Finance organisation and let them know your new bank account details.
You need a bank account while in higher education so you can receive your
payments from Student Finance.
This bank account doesn’t necessarily have to be a student specific bank account, but student accounts give students certain benefits and perks. Benefits like an interest free overdraft, discounts on your shopping or other freebies.
Is it worth getting a student bank account? There are all sorts of benefits that come along with signing up to a student bank account, but they can all seem pretty similar. It pays to do a little research to find the best bank for you. There are a number of different features to look for when choosing a new bank.
Interest Free Overdraft Limits
This is one of the core features of a student bank account: the 0% overdraft. It means that you can spend more than you have in your account without being charged any interest. It’s perfect for students, as your income will not always be as constant as the income you can expect in a full time job. It’s great to have that extra buffer when you need it, and avoids any charges if you do end up running low on funds.
Overdraft limits can vary massively, from anything around £500 to £3,000, depending on the bank you go for.
Try not to be tempted into seeing this as free money though. You should only use what you really need. You want to steer away from spending more money than you should, just because the option is there. Have a think about your individual life circumstances, and figure out what’s right for you.
Rewards & Gifts
Banks are always competing against each other for your business. So in an attempt to get you on board, they’ll regularly offer students incentives, rewards and freebies. You might find a free student railcard, discounts at your favourite shops, or even simply cash rewards!
It’s important to consider how these offers and deals stack up against other features of the account, particularly the above mentioned overdraft terms. It might be more fit for your purpose to opt for an account with preferential overdraft arrangements.
Whenever you’re opening any bank account, we recommend comparing the market to make sure you can get the best interest rates. Sadly though, it’s fairly standard for student accounts to offer pretty low interest rates.
Consider which banks have branches close to where you’re going to live at Uni. It’s not necessarily the be all and end all though. In recent years more students are looking to digital only banks instead, so you don’t need to rely on branches close by.
Most people should apply for a student bank account as soon as they receive their confirmed offer from their prospective university and UCAS.
You can open an account at a later time, even if your course has already started, but this does mean your Student Finance payments will be delayed. The earlier you can set up your account will make life easier for you when it comes to setting everything up at uni: loan payments, rent, bills, insurance etc.
As is standard when opening any new bank account, you’ll need to provide a proof of address and proof of identity. You’ll also need to provide documentation to confirm that you are a student. This can include your:
Proof of Identity
: Passport, Driving Licence or Birth Certificate
Proof of Address
: Recent Utility Bill or Bank Statement
Proof of Student Status
: UCAS Code or University Acceptance Letter
One of the core features of a student bank account is the interest free overdraft. It allows you to spend more money than you have in your bank account, without being charged for it.
Student bank accounts are unique in this way, as they often include an arranged student overdraft facility at a rate of 0% interest.
Overdraft limits can vary massively, from anything around £500 to £3,000, depending on the bank account you choose. It’s worth baring in mind that you are not always guaranteed to receive the advertised overdraft limit. This tends to depend on your credit rating.
What Happens If I Go Over My Overdraft Limit?
If you go beyond your overdraft limit, you might face fines and a bad start to your credit history. There is also the chance that your bank could place restrictions on your account, preventing you from taking out cash, or using your card. They might also cancel your overdraft and make you pay back the outstanding amount.
Interest rates on unauthorised overdrafts typically range between 20-40%.
If you think you might need to borrow more money, contact your bank. You might be able to formally arrange for your overdraft limit to be increased. Some banks may allow an extension to your limit. You might be charged a little for an ‘arranged’ or ‘planned’ overdraft extension, but this will often be less than any unauthorised overdrafts.
Some bank accounts allow you to earn interest on your savings, simply by keeping money in the account. Basically, the level of interest determines how much your bank will pay you for saving with them, given as a percentage.
Student bank accounts often receive interest rates of up to 1%.
These accounts give you the ability to earn around £1,000 a year in interest, and sometimes more, before hitting a cap.
Whenever you’re opening any bank account it’s always worth comparing the market to make sure you can get the best interest rates. Sadly though, it’s fairly standard for student accounts to offer pretty low interest rates.
Most student bank accounts automatically migrate over to a graduate bank account once your course ends. What is a graduate bank account? This will more often than not give you a longer interest free period to pay off your overdraft. This can sometimes be for a further two or three years, although the overdraft limit does tend to drop each year.
When you graduate your aim should be to pay off your overdraft. Keep an eye on when your interest free period ends, and have it all paid off before then.
It isn’t illegal to have more than one student bank account. You are allowed to have multiple bank accounts. However, many student accounts state in their terms and conditions that you can’t have any other student accounts open when you apply. Banks reserve the right to close your account if you’re not paying in your loans and other income. Banks will regularly check to see that this is happening.
You are allowed to apply for additional standard current accounts, just as long as they are not student specific accounts.
When it comes to bank accounts, you don’t have to be loyal. There’s nothing wrong with switching bank accounts to benefit from the next best deal. It may seem like a bit of a chore, but switching can pay dividends for you in the long run.
Before you switch, make sure you check your new bank will match your current interest free overdraft limits, and offer the same terms in that year of study.
International students coming to study in the UK are normally not eligible for an overdraft or many of the other benefits available to domestic students. However, international students are still eligible to apply for a standard current account with most UK banks. For those who are looking to open a bank, this option might be right for you.
If you choose to not open a UK bank account of any kind, you may build up high charges in foreign transaction fees. You may also find difficulty in engaging in a handful of typical transactions, like signing up for a phone contract or joining a gym.
International students might want to consider choosing a digital bank. Digital banks offer super relevant perks that are favourable to students like yourselves, such as free transactions abroad. It’s also often much faster to open an account with a digital bank.
Digital banks, often referred to as challenger banks, have the main goal of transforming the banking industry from the ground up. They are challenging the way traditional high street banks have always done things, by offering better deals, clever banking features to help you manage your money, and improved banking services.
A bank is just a bank right? Not really. But that’s not a bad thing. For those of you on the lookout for a new bank account, digital banks have a whole host of features that might be perfect for your student money management.
Clever Banking Apps
: One of the main benefits of a digital bank is the apps available. They’re super easy to use, well designed, and often worlds apart from traditional banks’ apps. They show you a lot of info about how and where you spend your money, helping guide your spending habits to fit within your savings budgets. You’ll also receive notifications whenever you use your card, just so you can keep tabs on your spending, and are made aware of any curious payments being made.
Budget Friendly Features
: Digital banking apps are filled with budget friendly features. They gather your spending habits into sections, so you can see how much you’re spending on what. This might sound a bit much, but being able to see what you’re spending where, in a clear easily understandable graph, might give you the shock you need to stop buying a new pair of sneakers for every day of the year.
: Digital bank accounts are free in most cases to set up. They’re super quick to set up, and you can often be up and running with your new account in just a few minutes. No visits to a branch, no complicated phone calls. Everything can be done online or through an app.
So you know you can get a free account, super fast, with a snazzy app to carry around with you. And that’s great, but as a student you may have slightly different needs than other people looking for an account.
: A fundamental feature of a student bank account is the ability to take out an interest free overdraft. If you can go with a digital bank that offers overdraft facilities, you can apply for one, inside your banking app, within seconds. It couldn’t be easier. However it is worth mentioning that not all digital challenger banks offer overdraft facilities, so if you think you’ll need one, do your homework before signing up and look at which one’s best for you. Remember, not everybody needs an overdraft. If you think you’ve got a good handle of your finances, you might not even have to worry about taking one out.
Zero Fee Travel Transactions
: Where many digital banks shine above the competition is travel benefits, and you want to spend your money abroad. Many challenger banks don’t charge you to use your card overseas, some even allowing free ATM withdrawals.
Digital banks might be a good choice for international students, as they let you avoid any of the difficulties you might encounter at a traditional bank in the UK. Traditional banks may require you to provide certain details which are difficult to put together, and they might take some time to set up your new account.
Digital bank accounts on the other hand are much quicker to set up, and become much more convenient for people just moving to the UK. What’s more, with fee free international transactions, they might be perfect for those travelling back and forth to a home country from the UK. It can simplify your money management hugely.
This article is updated regularly and we try to keep all information as accurate as possible, if you do notice an error please let us know!
Our Top Picks are based on a combination of price, what’s included in your contract, special offers and bonuses. We receive updates from banks regularly, and based on the current offers available we have made our choices. If you are a mobile provider and would like to offer a better deal than those above, please get in contact with us!