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Student Bank Accounts

Many student bank accounts offer a variety of incentives

If you’re studying at university on either a part-time or full-time course, you can apply to open a student bank account. Compare student accounts below.

Student bank accounts have many benefits over normal current accounts and often the various high street banks advertise different incentives to get you to choose one over the other.

Eligibility for a student account

To qualify you need to be enrolled on a higher education course in the UK.

Although credit scoring is slightly different for student bank accounts, if you have any serious adverse credit you may be turned down and offered a more basic account instead.

Advantages of student accounts

  • Student bank account will often come with a low or 0% overdraft, increasable over the duration of your course, for example £1000 in your first year, rising to £2500 or £3000 over the 3 or 4 year period.
  • A Student bank account will often come with a Student Credit Card, meaning you can manage all your finances with one banking institution.
  • After graduating, you have the option to switch your account to a ‘Graduate Account’ meaning that you will still be eligible for preferential terms, often including the 0% interest overdraft, allowing you to pay off what you owe gradually.
  • Acting responsibly over the duration of your course will help you build up a solid financial relationship with your bank for future dealings.

Student account incentives

Many accounts offer incentives to encourage you to choose on bank over another. These are to be considered carefully and not be the sole reason for selecting an account, but can be beneficial.

They can include:

  • Free five year railcard (saving £26 per year)
  • Free mobile phone insurance
  • Electronic good

Like any other current account, you will have the facility to set up direct debits, standing orders and have access to online and phone banking.

You will receive a Debit Card for making purchases in shop and withdrawing money from ATM’s.

Top Current Accounts
Get cashback when you switch and 5% AER
 
Interest Rate
(%)
Monthly
Charge
Overdraft
Features
 
5.00%
£0
0% for the first 12 months
Highlights:
  • Up to 300 cashback when you switch your account (terms and conditions apply)
  • 5% AER for 12 months
  • Must pay in £1,000 each month
0%
£0
19.3%
Highlights:
  • Online and telephone banking
  • Draw on cheques paid in before they clear
  • No monthly fee or minimum deposit
0%
£0
19.9%
Highlights:
  • Internet, telephone and mobile banking
  • Access to Regular Saver account offering 4% AER
  • Minimum 500 pay in to the account
1.50-3%
£0
19.3%
Highlights:
  • £10 overdraft buffer
  • Grace period if you go over your limit until 3pm
  • Access to Regular Saver offering 4% AER
5%
£20
0%
Highlights:
  • 850 worth of benefits - family travel insurance, health benefits, breakdown cover, commission free travel money
  • Up to 300 cash back
  • 0% AER on arranged overdrafts

Disadvantages of student accounts

  • Many accounts are advertised as having a large 0% overdraft available but in some instances this is an ‘up to’ limit rather than a guaranteed amount
  • Over the duration of your course, you can gradually rack up significant debt, all of which needs to be paid off when you graduate as interest can then start to be applied.
  • It can be easy to use your maximum overdraft limit as your financial buffer, rather than your actual money, leading to irresponsible habits developing and continuing later in life.
  • Like many current accounts, a student bank account comes with charges. If you exceed your overdraft limit, you will often have to pay a fee and in some instances these can be as high as £30 per transaction, with interest on top.

Does applying for a student account affect my credit score?

When you apply for any product with an element of lending attached to it, you will be credit scored before the lender approves you.

As a student you may have very little data stored by the credit reference agencies about your financial history and so in some cases you may be turned down for the student bank account.