Whether you’re a student heading off to university this autumn or a parent or grandparent keen to ensure your children or grandchildren are armed with the best financial start when they leave home for the first time, Moneywise has picked the top student current accounts for all your needs.
When it comes to picking the right account, you should consider the benefit of having a nice perk versus the practicality of an interest-free overdraft or in-credit interest.
Financial expert and founder of personal finance website MoneyComms, Andrew Hagger, comments: “Don’t leave it until the last minute and end up rushing your decision about which provider to bank with; start comparing accounts now so you get the one that works best for you.
“All the banks will look to woo you with freebies and offers but for many students a higher interest free overdraft limit will be the smarter financial move.”
Here are Moneywise’s top picks for student accounts for the academic year 2018/19. See the tables for full details of our best buys.
Best for overdrafts
Most students will need an agreed overdraft, the HSBC Student Bank Account comes with a guaranteed £1,000 in the first year, up to £2,000 in the second and up to £3,000 in the third. For opening the account you’ll also get an £80 Amazon voucher and a 12-month Amazon Prime Student membership. This gives free access to next-day deliveries and Amazon video content.
Alternatively, the Nationwide FlexStudent account offers a £1,000 arranged overdraft in the first year, rising to £2,000 in year two and £3,000 in year three, providing you pay in at least £500 a term. Note that while HSBC provides a guaranteed arranged overdraft limit in year one, Nationwide is the only provider to guarantee you’ll get the advertised overdraft level every year – other providers offer an “up to” amount depending on the person. This account also comes with 1% interest on balances up to £1,000 and cashback on certain spending.
Top for perks
If you’re looking for an account that will give you great perks or rewards there are a few to consider.
The Santander 123 Student Current Account comes with a free four-year 16-25 Railcard, which gives one third off off-peak rail travel around the UK. Four-year 16-25 Railcards aren’t currently sold separately but a three-year railcard costs £70, while a one-year railcard costs £30. This account also pays interest of up to 3% on funds of up to £2,000.
Alternatively, NatWest and RBS (both part of the Royal Bank of Scotland Group) offer one-year membership of Amazon Prime (usually £39), a £10 Amazon gift card and a one-year National Express Young Persons Coachcard (usually £12.50 and available to those aged 16 to 26), which offers a third off coach travel around the UK. These accounts also come with a Tastecard which offers deals on eating out and is worth £79.99. You do, however, need to pay in at least £750 every six months and have at least three monthly direct debits set-up.
|Provider||Maximum arranged interest free overdraft limit||In-credit interest||Additional perks|
|Year one||Year two||Year three||Year four||Year five|
|HSBC||£1,000||Up to £2,000||Up to £3,000||Up to £3,000||Up to £3,000||N/a||£80 Amazon gift card. One year of Amazon Prime student benefits. Access to regular savings account paying 3%|
|Lloyds Bank||Up to £1,500 (£500 in first six months, then £1,000 during months seven to nine)||Up to £1,500||Up to £1,500||Up to £2,000||Up to £2,000 (and in year six)||N/a||NUS extra card for three years (worth £32)|
|Nationwide Building Society (i)||£1,000||£2,000||£3,000||£3,000||£3,000||1% up to £1,000 max.||Cashback from specified retailers via Simply Rewards. Free cash withdrawals abroad|
|NatWest/RBS (ii)||Up to £2,000 (£500 in first term, followed by £2,000 from second term onwards)||Up to £2,000||Up to £2,000||Up to £2,000||£2,000||N/a||1 years free Amazon Prime plus £10 Amazon gift card. National Express+ - 1/3rd off coach travel. Tastecard - 2 for 1 restaurants and up to 40% off cinema.|
|Santander (iii)||Up to £1,500||Up to £1,500||Up to £1,500||Up to £1,800||Up to £2,000||1% on £100 to £199, 2% on £200 to £299, 3% on £300 to £2,000.||Free four-year 16-25 Railcard|
|(i) Must pay in at least £500 per term to qualify. (ii) Requires £750 to be paid in every six months and have at least three monthly direct debits. (iii) Must pay in a minimum of £500 a term. Source: Moneycomms.co.uk, 1 August 2018.|
‘Budgeting is an essential life skill’
Once you’ve nailed the best student account for your circumstances, you then need to turn your thoughts to how to manage your student finances. Mr Hagger says: “For many students, starting university will be the first time they’ve really had to seriously manage their own finances and to ensure there’s enough cash to pay for books, accommodation, food and going out.
“Unless you draw up a budget of your incomings and outgoings you could soon get in a mess with your money and end up having to go cap in hand to your parents to bail you out.
“Budgeting isn’t fun or sexy but it’s an essential life skill that will save you from worry, heartache and being hit with bank charges you can ill afford.
“Putting together a quick spread sheet on your laptop or a smartphone app is all it takes to make sure you have a regular handle on your money matters and to know how much you’ve got in the bank to last you until the end of term.”
|Provider||Authorised overdraft fees||Unauthorised overdraft fees|
|HSBC||Interest-free||No access to unauthorised overdraft|
|Lloyds Bank||Interest-free||1p per £7 borrowed per day|
|Nationwide||Interest-free||No access to unauthorised overdraft|
|NatWest/RBS||Interest-free||No access to unauthorised overdraft|
|Santander||Interest-free||£5 a day (max £50 per month)|
|Source: Moneycomms.co.uk, 1 August 2018.|