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How to find the best student bank account
Times can be tough financially when you’re a full-time student. In many cases you won’t have time to work a full-time job, but you still need to fund your living expenses.
Thankfully, most of the major banks have created student bank accounts to help ease your financial worries during your studies.
These accounts usually come with a large interest-free overdraft that you can borrow from when the purse strings become particularly tight. This is arguably the most useful aspect of a student bank account, especially if your student loan isn’t enough to cover your cost of living during your studies.
It’s important to remember that interest will be charged on all student account overdrafts eventually, so it’s best to use it sparingly and repay it as quickly as possible.
Many banks also add freebies or discounts with retailers in order to tempt students to their accounts. If you’re a student with a bit of money to spend, these accounts might prove more eye-catching than those with huge overdrafts.
Ultimately, the best student account will depend on your personal financial situation.
How are student bank accounts different from regular current accounts?
Student bank accounts are, by all means, full current accounts and not very different from non-student accounts: they do all you can expect, from providing you with a debit card to letting you set up standing orders and direct debits.
However, they’re tailored to your student life, offering great benefits and freebies. Unlike standard accounts, most student accounts also offer a 0% overdraft.
Banks are generous with these accounts because in most cases your student account will be your very first bank account, so they use it as a way to attract new customers that they hope to keep for life.
What is required to apply?
To apply for a student bank account, you’ll need to provide the same personal details as when applying for a regular bank account. Your proof of ID, basic financial details, address history and a credit check, etc.
You’ll also need to provide details of the course you’re studying to prove you’re a student. You’ll usually have to provide your UCAS number, as well as the name and length of your course, plus your university name.
Student bank account overdrafts
One of the core features of student bank accounts is the 0% overdraft. It means that you can spend more than you have in your account without being charged any interest, which is great because a student’s income is not always as constant as, say, an employee’s salary.
You’ll be credit-checked when you apply for it, but don’t worry too much – as a student, banks won’t expect you to have a massive credit history anyway.
The limit of your student account overdraft will usually increase for each year of university; by the third year, it can be pretty high, sometimes up to £3,000. You’ll need to request the increase though.
As we said, overdrafts are great and mean you can get extra money for your Christmas gifts or for a special night out, but don’t forget that you’re still borrowing money and will have to pay it back at some point.
For students requiring further credit or looking to start building a positive credit history, most banks can also offer student bank account holders a student credit card (subject to approval).
Student bank account freebies
Even if you’re not planning on touching your overdraft (wise resolution!), student accounts can offer a variety of other benefits to choose from. Here are some examples:
- Interest on your balance. Up to a certain balance limit. Great if you think you’ll be able to stay in credit most of the time.
- Transport discounts. Some accounts come with a free 16-25 railcard, which would normally cost you £30 a year and features a 1/3 discount on all rail fares in the UK. If you’d rather travel on four wheels, you may also be able to get a coachcard.
- Cash upfront. A sort of sign-up bonus to lure you in. Cash isn’t an especially fancy reward, but it could be better value if you don’t think you’ll take that much advantage of the other benefits on offer.
- Discounts and cashback. Some accounts offer dedicated discounts at certain retailers or restaurants, or cashback options.
4 money-saving tips for students
- Budget well and you might not need an overdraft! Going to uni is all about learning new things and gaining life experience. Why not get a head start and get into some good money habits from your first term? There are a range of budgeting apps to help you with this.
- If you need to go for an overdraft, makes sure it’s 0% interest. Like we’ve said above, it’s best practice to avoid the overdraft. But… a few big nights out in a row and it’s easy to find yourself there. If this sounds like you (let’s be honest, it does), you want to make sure you’re paying 0% on your overdraft. The interest-free overdrafts that come with students accounts mean this is one of the only times in your life you’ll be able to do this!
- Don’t go over the overdraft limit. You might have a nice big 0% overdraft, but don’t exceed the limit on that. Banks will start charging you for every day you’re over the limit, so watch out!
- Switch to a graduate account when you’ve graduated. You should aim to pay off your student overdraft ASAP. When you’ve finished uni, switch to a graduate account with good rates and terms that will allow you to pay off the debt.
Student bank account jargon explained
Funding requirement. Some accounts require the account holder to pay in at least a specified minimum amount each month, academic term or year.AER. Annual equivalent rate. This is a way of showing the interest you’d earn in a year on money you deposited into an account, and helps you to compare accounts.
EAR. Equivalent annual rate. This is the interest rate that applies when you borrow money – when you use your arranged overdraft, for example. It shows the interest you would be charged over a year if your account were to remain overdrawn.
Arranged overdraft. If your account goes into the red, the bank will charge you a set EAR (which may be 0% in the case of a student account overdraft). Before you go overdrawn, you need to arrange this facility with your bank.
How to find the best student bank account if you are an international student
International students are afforded less perks with their student bank accounts. It will be difficult for them to be approved for an overdraft too. A lot of international student accounts come with a monthly fee as well.
Some banks don’t offer specialised student bank accounts for international students. Those that do have a separate page on their websites illustrating the perks available and the monthly fee attached.
As there are so few perks available, international students would be well advised to choose the account with the lowest monthly fee.
However, some students may be more drawn to the accounts that offer lower international transfer fees, or those that don’t require you to visit a branch to open an account. Visit our guide on opening a bank account as an international student for more information.
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