Tips for Choosing a Top Student Bank Account
Choosing the best student bank account for you can be tricky. Our comparison of what the top banks have to offer students in 2022 makes it easy.
Looking to open a student bank account but not sure which bank to go with, or how to apply? Well, you’re in the right place!
What is a student account?
A student bank account is designed just for university students. Unlike standard current accounts, students are treated to benefits including freebies and interest-free overdrafts.
You will need to prove your student status when opening an account, something we’ll come to later.
Once you’ve opened a new student account, remember to update your Student Finance body and let them know your new bank account details (you can do it online).
5 tips for choosing a top student bank account
Beware of the student bank account “freebies”
There’s plenty on offer this year, but don’t be seduced by freebies! Offers including free products, travel discounts, cash rewards, and “exclusive” deals may sound tempting, but you need to be smart. A student bank account offering a freebie worth £20 is pitiful compared to a large interest-free overdraft for three years or more…
Go for the largest student overdraft
An arranged overdraft is a common way of borrowing money through your current account. The best thing about student bank accounts is that money borrowed through an overdraft has 0% interest. With an interest-free overdraft, you pay back nothing more than what you borrow. This is unique to student bank accounts, so take full advantage of it! Even if you don’t need the full overdraft, transfer some of it to a savings account. You can then make money by earning interest on the borrowed money whilst you’re a student. Beware that the 0% interest period is not forever! It only lasts a certain number of years after you graduate before interest charges set in.
Is the overdraft ‘up to’ or ‘guaranteed’?
The advertised student 0% interest overdraft is usually the maximum they offer (hence the “up to” wording). For many banks, this amount is only available in your final year at university and only to students with a decent credit rating (see below). Our comparison below of the best student accounts considers the likelihood of you receiving the full amount from each bank.
Know the repayment conditions
You probably won’t have to repay your overdraft for a while after you graduate, but the sudden demand for £3,000 could be quite a shock! So, don’t treat it as free money and plan ahead. This starts with understanding the conditions.
Know your credit rating
Student account overdrafts are a form of borrowing, so you’ll be credit scored when applying. The quality of your score can determine how much overdraft you’ll be offered. Raise your chances of approval by knowing your own credit score and taking steps to improve it. Start by getting a free credit score from Experian, the largest agency used by banks.