If you’re heading off to university this autumn there is a good chance you’ll need a student bank account
It can be easy to put off financial choices before term begins but taking out a student account can make the financial side of university life less of a worry.
Lots come with an interest-free overdraft and perks such as railcards or free cash.
While debt is never a good thing, an overdraft can offer a much-needed lifeline in case of emergencies. Be careful though, while some banks give a guaranteed amount, others offer an “up to” amount where you could get less than the amount advertised.
There are plenty of student accounts to choose from with all manner of offers from the banks to help entice you, but which is the best one?
One of the top student accounts on offer is from HSBC. It comes with a generous £100 cash bonus and a 0% overdraft worth £1,000 in the first year, £2,000 in the second year and £3,000 in the third year. You also have access to a 12-month fixed savings account that lets you save up to £3,000 a year at a rate of 3%. You can also apply for a student credit card.
The account also comes with 12-months free British Cycling Fan Membership, which gives you 10% off at Halfords and Evans Cycles.
HSBC also offers student exclusives, which include cheap cinema tickets and money off Deliveroo orders.
The Nationwide FlexStudent account also offers a 0% overdraft, which a limit of £1,000 in the first year, £2,000 in the second year and £3,000 in the third year. It offers 1% AER on balances up to £1,000. However, the account offers no perks and you will also have to pay in £500 a term to maintain the account.
Once you graduate you will be moved on to a FlexGraduate account. The arranged overdraft remains interest free and is capped at £2,500 in the first year after graduation, £1,750 in the second year and £1,000 in the third year.
The Santander 123 Student Account comes with a 0% overdraft of £1,500 over the first three years of your degree. If you study for longer, the overdraft facility increases to £2,000 for your fourth and fifth year.
It pays a monthly interest rate of 3% AER/2.96% gross (variable) on balances from £300 up to a maximum of £2,000. You will also get free four-year 16-25 Railcard offering a third off most UK rail travel.
As with the Nationwide account you will need to pay in at least £500 a term to keep the account open.
The NatWest student account allows you to apply for a 0% overdraft with a limit of up to £500 in the first term, after which you can apply to increase it to up to £2,000. It also gives you a choice of one of three offers: an Amazon Prime Student account, a National Express Coachcard, giving you a third off travel, or a tastecard, which gives you 50% off at selected restaurants.
When you open a Barclays Student Additions Account you can apply for a £500 fee free overdraft. You can apply to increase this to £1,000 in the first year, £2,000 in the second year and £3,000 in the third year.
Andrew Hagger, personal finance analyst at Moneycomms, says you should not necessarily base your decision to take out a student bank account on how good the freebies are.
He says: “Consider applying for a student bank account that comes with the largest interest-free overdraft - some banks may only offer £1,500 or £2,000 but HSBC, Nationwide and Barclays are all offering up to £3,000.
“You may not need to use it, but if you do, that extra £1,000 interest free is far more financially rewarding than the savings accounts or freebies typically offered to students – it’s easily worth an extra £100 per year savings on overdraft charges.”
HSBC Student Bank Account
HSBC’s student bank account has a £100 cash bonus along with several student exclusives including cheap cinema tickets and money off Deliveroo orders. The account comes with a 0% overdraft worth £1,000 in the first year, £2,000 in the second year and £3,000 in the third year.