Student and graduate bank accounts

Overdrafts on student bank accounts that don’t charge interest or don’t charge any fees

Getting the finest bank account for students should be a top priority for everyone who will be starting college in the near future.

Not only do you want an overdraft that is big and has an interest rate of 0% for the entirety of your programme, but you also want to make sure that the package you acquire has the best possible advantages that are tailored to your specific needs.

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 restrictions 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 dependent on your credit score; therefore, it is possible that you will not receive the maximum amount that is stated.

Which? has 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 get 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 entire 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 bonus for the 2021-22 school year.

It will continue to offer a free four-year Santander Railcard, which has a value of approximately £90 (while 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 highest interest-free overdraft, the bank does promise that if your application is approved, you will receive the maximum overdraft amount of 1,500 pounds in the first three years.

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

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 accounts on a monthly basis anymore (in the previous year, it paid 1% AER on amounts up to £2,000).

In the past, Nationwide offered 1% interest on accounts 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 restricted.

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

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

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

If you remain within your free limit when utilising an overdraft on any of the accounts in our table, you will not be subject to interest charges or other costs 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 further 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 set limits 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 can 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 institution (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 take 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 while the majority of banks will allow you start the application process online, they may ask that you visit a branch with evidence of identity before you can actually begin using it. This is typically the case for checking accounts.

An exception is made by Barclays; students can open an account in a matter of minutes by installing 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; is I allowed to open more than one bank account?

It is not possible to open numerous 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, such as 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 payments from your loans and other sources of income.

It is important to keep in mind that having access to a greater overdraft can be problematic 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 regular current account that does not have an overdraft capability. Additionally, digital banks such as Monzo and Starling offer innovative smartphone solutions 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 it possible?

You are not required to continue working with the same service provider for 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 move student accounts in a matter of only seven days.

Before making the transition, 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 tutorial 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 large interest-free overdrafts for a period of up to three years.

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

For the majority of graduate accounts, you won’t be able to open one until two or three years after you’ve completed your programme. When you apply for one, the bank will ask to see your degree certificate in addition to proof of identification and address.