The Best Student Bank Accounts: Maximizing Your Money as a Student

 

Will my student bank account allow for an overdraft of up to its maximum limit?

It’s not always the case; the majority of these overdraft limits don’t come with any sort of guarantee. Your eligibility for an overdraft will be determined on an individual basis by the bank and will be based on your credit score; therefore, it is possible that you will not receive the maximum amount that is advertised. s received confirmation from Nationwide that the maximum overdrafts for each year are available to customers who do not have problems with their credit and who comply with the terms and conditions of their account.

In other circumstances, interest-free overdrafts are rolled over into subsequent billing cycles:

According to TSB, its students will receive at least £500 for the first six months of the programme, and they will have the opportunity to apply for an increase to £1,000 in the seventh through ninth months, and up to £1,500 beginning in the tenth month.
Students in their first year who open a Lloyds account receive an additional £500 within the first six months of account ownership, £1000 within the seventh month, and £1500 within the tenth month of account ownership.

A select few financial institutions demand additional forms of collateral in order to be eligible for the full overdraft:

Nationwide FlexStudent: pay in at least £500 per term from the date the account is opened (this can include your student loan, money from family members or any other income but not internal transfers, such as moving money from a Nationwide savings account); Santander 123 Student: pay in at least £500 per term to remain eligible for both the free Railcard and the interest-free overdraft (as with Nationwide, this can’t include transfers from other Santander accounts in your nationwide account

Scroll down for a discussion of this year’s freebies offered by student bank accounts as well as an explanation of what happens if you go over your overdraft limit.

Student checking accounts that come with free railcards and other perks.

Santander continues to provide the most valuable student account freebie for the 2021-22 school year.

It will continue to offer a free four-year Santander Railcard, which has a value of approximately £90 (although four-year cards are not generally available for purchase, three-year Railcards cost £70, and one-year Railcards cost £30).

Although Santander does not provide the largest interest-free overdraft, the bank does guarantee that if your application is approved, you will receive the maximum overdraft amount of 1,500 pounds in the first, second, and third years.

Be aware that in order to be eligible for this offer, you will need to make a payment of at least £500 each term as well as register for online banking (and the overdraft).

The following is a list of the other freebies that are being offered this year:

HSBC – £80 plus £20 Uber Eats voucher or ASOS Premier

This year, HSBC is also providing an enticing perk to its customers in the form of a cash bonus of £80 in addition to either a £20 voucher for Uber Eats or ASOS Premier membership (which gives you free next day delivery for a year).

In order to be eligible for the £80 and reward, you will need to apply before the 31st of December 2021 and make at least five payments using the HSBC debit card that is linked to your student account. Payments for gambling and financial services, such as credit card insurance payments, cash withdrawals, and card-to-card payments are not eligible for this reward.

If you were already a holder of an HSBC Student Bank Account on June 1, 2017, or later, you will not be eligible for this bonus offer.

£50 plus a four-year Tastecard from NatWest or RBS

The NatWest and RBS student accounts come with a cash bonus of £50 and a Tastecard that is valid for four years and can be used until November 5th, 2021.

Within the first thirty days of opening your account, you will need to sign up for online or mobile banking and select the option to receive paperless statements in order to be eligible for the reward.

If you meet the requirements for the offer, £50 will be deposited into the account you provide within ten business days.

Bank of Scotland/Lloyds: TOTUM card valid for three years

If you open a student account with Bank of Scotland or Lloyds before October 31, 2021, you will receive a free TOTUM card that is valid for three years. However, this offer is only valid for new accounts.

This card, formerly known as the NUS extra student discount card, is now known as the TOTUM card. It can be used to receive discounts on high-street and online shopping.

A subscription to Barclays’s Perlego offering

Perlego is an online library that specialises in academic and non-fiction books. Once again, all new customers of Barclays Student Additions will be eligible to receive a free 12-month subscription to Perlego.

You have until the 30th of November 2021 to open the account.

You will receive an email containing a registration code and instructions, which you will need to redeem before the 31st of December, 2021.

Student checking and savings accounts that accrue interest

The vast majority of financial institutions have eliminated student interest payments.

Santander will not pay interest on credit balances on a monthly basis anymore (in the previous year, it paid 1% AER on balances up to £2,000).

In the past, Nationwide paid 1% interest on balances up to £1,000, and first-year students who banked with HSBC earned interest at 1.5% above base rate on balances up to £1,000; however, both of these offers have since been capped.

At the moment, Halifax and TSB are the only financial institutions that offer students credit interest payments.

While TSB will pay 5% interest on balances up to £500, Halifax will only pay 0.1% interest on any balance.

What will happen if I go over the limit on my overdraft?

If you remain within your free limit while using an overdraft on any of the accounts in our table, you will not be subject to interest charges or other fees for making use of the overdraft feature.

Get in touch with your financial institution so that you can formally request an increase in your credit limit if you find that you require additional financial assistance. However, the majority of financial institutions will charge you a “arranged” or “planned” overdraft interest rate if you request an extension to your free limit.

If you exceed the limit of your free overdraft account without being authorised to do so, it may have a negative impact on your credit score, and some banks may charge you fees for payments that are returned as unpaid.

Although Nationwide does not assess any fees, it does place restrictions on your account. These restrictions prevent you from withdrawing cash or using your card until the balance on your account is brought back within the limit that was agreed upon.

How do I set up a bank account for my student status?

You must be at least 17 years old to apply for a student account; the minimum age requirement varies from provider to provider and is listed in the table above.

Student bank accounts provided by Barclays, HSBC, and Santander are now available to degree apprentices who are in the first year of a qualifying course. In addition, these accounts are available to students attending universities.

You will need to provide proof of identity (such as a passport, birth certificate, or driver’s licence) as well as proof of address in order to open a checking account.

You will also need the UCAS confirmation letter from your university (or a copy of your Apprenticeship agreement signed by your employer) in order to demonstrate that you have been accepted without condition.

If you have a conditional offer from a bank, they may accept a copy of your A-Level results as proof of your eligibility, but you should check with them first.

Is it possible to apply online?

Even though the majority of banks will let you start the application process online, they may ask you to visit a branch with proof of identification before you can actually begin using it. This is typically the case even if you can start the application process online.

An exception is made by Barclays; students can open an account in a matter of minutes by downloading the mobile banking app, uploading a video of themselves taking a selfie, and scanning an identification document that contains their UCAS code.

You will be required to submit your application in person at a branch in order to finish it if you do not have a UCAS code.

I am a student; am I allowed to open more than one bank account?

It is not possible to open multiple student bank accounts with the same provider, and some providers, such as HSBC and Nationwide, require that you do not already have a student account in order to apply for one of their student accounts.

Others, like Barclays, NatWest, RBS, and Santander, require that you use them as your primary student account; consequently, even though you might be able to open a second student account with these banks, they retain the right to close it if you’re not making the required payments from your loans and other income.

It is important to keep in mind that having access to a larger overdraft can be risky because you will be required to repay any debt incurred from student overdrafts once you have graduated.

You have the option to apply for an additional standard current account that does not have an overdraft facility. Additionally, digital banks such as Monzo and Starling offer innovative smartphone helps that could assist you in managing your student loan and keeping track of your spending.

I’d like to switch my student bank account, is that possible?

You are not required to continue working with the same service provider throughout the entirety of your programme.

Every account listed in our table is a part of something called the “switch guarantee,” which indicates that you can switch student accounts in a matter of just seven days.

Before making the switch, you should make sure that your new financial institution will honour your current 0% overdraft rate and provide you with the same terms as other students who are enrolled in the same academic year.

Find out more about a step-by-step guide that explains how to change an account within a week here.

When I graduate, what will happen to the money in my student bank account?

As soon as you receive your diploma, most financial institutions will upgrade your student account to a graduate account; however, you should compare the offer with those of other financial institutions just to be sure.

Some graduate accounts are only available to students who already have an account with that particular financial institution (Bank of Scotland, Lloyds, Nationwide, Santander), but the vast majority of graduate accounts are available to anyone who has graduated from college within the past two or three years.

When you graduate, the amount of money you can borrow without incurring interest may suddenly decrease; therefore, you should make preparations in advance if you want to avoid incurring significant fees.

Learn more about which hints can assist you in paying off your student overdraft debt here.

What exactly is an alumni account?

Current accounts that are specifically designed for graduates are offered by most high street banks. These accounts typically come with generous interest-free overdrafts for a period of up to three years.

Annual limits can range anywhere from £1,000 to £3,000 and have a tendency to decrease with each passing year. This is done to encourage you to begin paying off your overdraft as soon as possible.

When you apply for most graduate accounts, the bank will ask to see your degree certificate in addition to other forms of identification and proof of address. This window of eligibility typically lasts for two or three years after the completion of your programme.

Do I absolutely need to create a graduate account?

Even if you start working as soon as you get your degree, it is still a good idea to have an interest-free overdraft for a few more years as a safety net.

If you are confident that you won’t need to borrow any money, you should shift your focus to accounts that pay you interest for being in credit or other perks such as cashback on household bills. If you are not convinced that you won’t need to borrow any money, continue reading.

If you use the majority of the included benefits, packaged accounts can be more cost-effective than individual accounts. Which? conducts an annual analysis of the value of the insurance that is included in these accounts in order to determine the packaged accounts that are the best and the accounts that are the worst.

When I graduate, should I look into changing banks?

If you already have a student account, by the time you graduate from university or college, your student account will be upgraded to a graduate account automatically by your bank.

But if another bank is providing a better deal, there is no reason to continue doing business with the same financial institution.

Students are a desirable long-term prospect due to their significantly increased earning potential; this is true even if the student has existing debt.

Can I switch if I have a negative balance?

Yes, but you’ll be responsible for repaying any overdraft fees and balances.

If your new bank is willing to provide an equivalent overdraft, then this won’t be a problem for you, and you can still use the seven-day switching service to switch banks if they are willing to do so. You might not be able to make the switch, however, if it won’t match the overdraft limit that you currently have.

You shouldn’t make the switch until you’ve talked to your bank about it first because some financial institutions require you to pay back the entire balance within a short period of time after you close an account with them.

Will I be allowed the maximum amount of an overdraft?

Certainly not in every case. You’ll notice that most banks describe interest-free overdrafts as being ‘up to’ certain limits; consequently, the amount you’re offered may end up being lower than what was advertised as the limit for the overdraft service.

The majority of overdraft policies for student accounts are tiered, meaning that they gradually increase each year; consequently, you might not get the maximum amount until your final year of schooling.

Before applying for any kind of loan, it is a good idea to look into your credit score and see where you stand financially. This page provides a free tutorial on how to accomplish this task.

It is important to be aware that if you have never taken out a loan before, your credit score may be lower than you anticipate. This is due to the fact that lenders typically look for evidence of previous timely repayments.

What happens if I go over my graduate overdraft limit of 0%?

Try to stay within the boundaries of your interest-free limit.

The majority of financial institutions will make an effort to halt payments before they resort to unplanned overdrafts; however, if this does occur, it may have a negative impact on your credit score.

What options do I have once my graduate deal is up?

Your current account will be converted to a standard current account two months before your graduate deal is set to expire. You will receive notification of this change from your bank at that time.

This should be one of its fee-free current accounts – for example, Nationwide’s FlexGraduate becomes a FlexDirect account – but you should make sure to check the terms and charges that will apply before you open an account with them.

The Current Account Switching Service makes it possible to switch financial institutions in a matter of just seven working days, whereas the majority of people stick with the same bank or building society throughout their entire lives.

Although some financial institutions provide one-time cash bonuses for switching checking accounts, you shouldn’t let this be the sole factor in determining which account to go with.

Our ranking of the best and worst banks, based on customer feedback, reveals how actual account holders feel about their financial institution, and Which? The recommended providers not only provide high-quality goods but also outstanding assistance to customers.

What happens if I still have a negative balance when my graduate account is closed?

If you still have a negative balance when your graduate account comes to a close, after two or three years, you run the risk of being penalised with interest and fees, which can quickly add up to a significant amount of money.

You should check your credit score before applying for an interest-free overdraft on a standard account, as only a few financial institutions provide this perk. The most generous of these institutions is First Direct, which gives customers access to an interest-free overdraft of up to £250.

You also have the option of transferring your debt to a credit card that offers an introductory period of 0% interest on balance transfers. This will allow you to buy yourself some additional time to pay off your debt.

Should I submit an application for a loan for graduate school?

It’s possible that your bank will only provide graduate loans to customers who already have a current or graduate account with them.

Always look around at different lenders for personal loans and compare the rates.

If you are considering furthering your education, you should know that the Student Loans Company provides master’s degree loans with a maximum amount of £11,570 for classes that begin after August 2021.