We reveal the best student bank accounts, including how to get a free railcard or a £3k 0% overdraft
PICKING a student bank account can be a minefield for school leavers preparing for their university life.
As school leavers are choosing their universities across the country, banks will try to entice these future customers with freebies and generous interest-free overdrafts.
According to banking expert Andrew Hagger from or many cash-strapped students, the current account offering the highest interest-free overdraft limit will be the biggest attraction.
So if you know you are likely to slip into the red, it is worth looking for an account with the most generous arranged overdraft.
Barclays, Nationwide and HSBC all offer up to £2,000 interest-free in year two and £3,000 in year three, whereas TSB, Santander and Lloyds only offer a maximum of £1,500 in the third year.
Mr Hagger explains: “Having to pay interest on that extra £1,500 for TSB would set you back interest of 8.21 per cent plus a £6 usage fee each month, so in the worst-case scenario, could cost you more than £190 in 12 months.”
Those who don't consider the overdraft offer as a priority might wonder if the giveaways are worth taking.
And with a lot of offers to choose from, we took a look at the best deals out there, from the £3,000 interest-free overdraft to the best freebies.
Best overdraft offers
Nationwide’s FlexStudent current - Top overdraft and possibility to open savings account
According to Mr Hagger, Nationwide’s FlexStudent current account offers one of the best overdrafts on the market.
Students can get a £1,000 overdraft in their first year, £2,000 in year two and £3,000 in the third.
They can also earn 1 per cent balances up to £1,000.
Another real benefit for students who are lucky enough to have any spare cash is that they are entitled to open a Flexclusive Regular Saver account where they can pay in a maximum £250 per month for 12 months at an interest rate of 5 per cent.
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“That's an excellent rate, plus you can access your cash without notice or penalties if needed,” Mr Hagger told the Sun Online.
To open the account, students need to be within two months of starting university and to keep the benefits they will need to pay in at least £500 per term.
Barclays - Up to £3,000 with an initial £500 and cashback on spend with over 150 retailers
Barclays gives student an initial £500 overdraft as soon as they open the account.
As with most accounts, the limit offered goes up as studies progress.
This means students can borrow up to £1,000 in their first year, and up to £3,000 while studying.
Another big perk of the Barclays is the cashback it offers on spend with over 150 retailers, including Topman, Oasis, Waterstones and Boots.
How does an overdraft work?
AN OVERDRAFT will allow you to borrow money through your current account.
Types of overdraft
- Authorised overdrafts: are arranged in advance. You agree a borrowing limit with your bank, and you can spend money up to that limit through all the normal payment methods.
- Unauthorised overdrafts: or unplanned overdrafts, happen when you spend more than you have in your bank account without agreeing it in advance, or if your bank has agreed an overdraft for you but you go over the limit they’ve set. You will pay extra charges and these can mount up very quickly.
HSBC – Up to £3,000 overdraft, a £60 Amazon gift card and one year of Amazon Prime benefits
HSBC offers students a generous overdraft offer.
Each student opening an account will get overdraft between £500 and £1,000. They will be able to request an increase to £2,000 in year two and £3,000 from year three.
In term of perks, each first-year student will get an £60 Amazon gift card, as well as a one-year Amazon Prime membership for students if an account is applied for by October 31 this year.
Best freebies
Santander – Four-year 16-25 National Railcard
If the free overdraft isn’t a priority for you then Mr Hagger advises future students to look at Santander for one of the best-value freebies on offer.
The freebie is a four-year 16-25 National Railcard, which could save customers one third off on rail travel in Great Britain, which MoneySavingExpert values at about £90.
It comes with Santander's 123 Student Current Account.
The perk is particularly useful for anyone studying far away from home who plans to travel regularly.
But be aware that the lender doesn't offer the largest interest-free overdraft, and you need to pay in at least £500 every term and register for online banking to be eligible for the offer.
NatWest/RBS – Four-year National Express Young Person Coach Card
Natwest and RBS offer a free four-year UK coachcard offering one third off standard fares with National Express.
It usually costs £27 to buy a three-year card and one-year Coachcards cost £12.
Again, NatWest and RBS do not offer the largest overdraft giving £500 in the first term and £2,000 after that.
Lloyds student account – Three-year NUS card
Students opening an account with Lloyds are entitled to a free NUS card, which gives over 200 UK student discounts of up to 40 per cent.
For example students can get 20 per cent off at National Express or up to 40 per cent off on a meal at Pizza Express.
Lloyds will however offer one of the smallest overdraft of just £1,500 in year three and £2,000 for those studying for four to six years.
How do I open a student bank account?
- You can usually apply for a student account from age 17 or 18 depending on the bank
- You'll need proof of identity (passport, birth certificate, driving licence) and proof of address.
- For a student account you also need the UCAS confirmation letter from your university as unconditional proof of acceptance
- Some banks may accept a copy of your A-Level results if you have a conditional offer but this varies depending on the bank.
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