Best Student Bank Accounts

Last updated: 24th October, 2017

Pound coinsSo you’re heading off to university? Time to sort out your bank account! Banks want you and they will try to entice you to open an account with them in lots of ways. It’s your job to get the most out of them, and that’s what we’ll help you with here!

The best student bank accounts are chosen each year by student finance experts based on the criteria in the bank account comparison table below. More than anything else you should consider the size and length of the interest-free overdraft offered to students.

WarningNot all students will get the full overdraft, it depends on your credit rating. Luckily you can find out what banks think about you by getting a free credit report online through Credit Reports Matter. We have tried & tested this service ourselves and it’s the best we’ve come across, though you’ll need to cancel your free trial once you’ve received your report.

We go into more detail about each of the accounts and things you need to watch out for on this website.

The student bank accounts reviewed for 2013

1. Co-opstar

Max Overdraft: £2,000 guaranteed

The Co-op student bank account is the top choice again this year, cementing its place as the best account for students for the second year.

The reason why this account is best is because the overdraft for students is ‘guaranteed’ at £2,000 by the 3rd year of study. In your first year you will get £1,400 and then £1,700 in the second.

If your credit score is good enough (again, use Credit Reports Matter’s free trial), it’s also worth considering Halifax (below) who offer a higher ‘up to’ interest-free overdraft.

To open an account with the Co-op, you must deposit at least £300 when you open the account (which will just be covered by your student maintenance loan).

Aside from the overdraft, the Co-op student account comes with great customer service and they are known for trading ethically.

Halifax Student Account2. Halifaxstar

Max Overdraft: £3,000 (not guaranteed)

Halifax is only marginally our second choice this year. This is because (although it’s not guaranteed) they offer by far the highest interest free overdraft of any student account.

Straight away you should be offered £500 at 0% and then in your first year you are unlikely to top £1,000. The actual amount you get will depend upon your credit rating (get the free report).

You need to make sure that you ask to increase it yourself otherwise it won’t go up over the years.  Also be warned that getting the full £3,000 can be tricky and going over the arranged limit is a risk as Halifax have some of the highest charges at 24.2% plus a £28 monthly fee.

Santander Student Account3. Santander

Max Overdraft: £1,500 guaranteed

The main draw with Santander this year is that they they will be offering students £50 for switching or opening an account when you pass their checks including that pesky credit rating (check yours free).

In the first year you could be looking to get a 0% overdraft up to £1,000 an overdraft of £1,250 in the second year and £1,500 in the third year. You also get 1% interest on your balance up to £500.

The only downside to the Santander account is the poor customer service. In our 2012 student bank account review it struggled to impress.

RBS student account4. Royal Bank of Scotland/NatWest

Max Overdraft: £1,500 guaranteed

The Natwest student bank account as well as the RBS one have not impressed in recent years. They now both offering a guaranteed £1,500 overdraft at 0% by your third year.

Like the others, the overdraft limit is an ‘up to’, in your first year you should expect to get closer to £1,250 and then £1,500 in your third year dependent on your credit rating.

The Young Persons’ Railcard offer is only available to existing customers who have been with Natwest since before May 2012.

There are Natwest branches at 55 of the biggest universities in the UK as well as more student advisors than any other UK bank. Offers free text alerts about your account to your mobile. Internet, telephone and mobile banking.

HSBC Student Account5. HSBC

Max Overdraft: £3,000 (not guaranteed)

The HSBC student bank account is very similar to what Halifax have to offer. We put it in at number 4 last year and by all means you should check it out in comparison with the other student bank accounts in 2012.

One positive is that you get 2% interest on any balance up to £1,000 in your first year at university.

There is also a whopping overdraft limit of “up to” £3,000 of which only £500 is guaranteed unfortunately depending on your circumstances and credit history (which you can check here for free).

lloyds TSB student account6. Lloyds TSB

Max Overdraft: £2,000 (not guaranteed)

They Lloyds TSB student bank account is great for students looking to take a 5 year course like Medicine but the 0% overdraft relies on your credit rating.

The fact of that matter is that over the 3 years Lloyds TSB only offer an overdraft of £1,500 and the £2,000 0% overdraft is only available for students in their 5th year at university. Compared to other student accounts such as the Co-op and Halifax it simply doesn’t compete.

However, there are some great freebies on offer with the Lloyds TSB student account including a free NUS extra card worth £33 a year, LHA membership for 3 years and 40 free music downloads.

Barclays Student Account7. Barclays

Max Overdraft: £2,000 (not guaranteed)

The Barclays account was a good one to have for a certain type of student. If you can stick within your 0% overdraft limit of up to £2,000, dependent on your credit rating, then you will be fine. However, there are some extremely high charges for exceeding your limits.

They do offer discounts with Phones4u which you can check out on their website.

Make sure you do not go over the 0% overdraft limit as the charges can be quite hefty.

Smile Student Account8. Smile

Max Overdraft: £1,800

Smile are a company who come under the Co-op umbrella and although their student account offering is not too well know, it is popular between a handful of students.

The account offers a guaranteed overdraft of £1,000 in the first year, £1,400 in the second and £1,800 in the third year.

Smile is an online “internet bank” so accessing a local bank on your campus will not be possible. However, so many students are using online banking now that it may not be an issue.

For a full list of rankings and to find out what is the best student bank account for 2012 check out our updated student bank comparison table at the bottom of this page. This table offers extra information on all of the major bank accounts offered to students and you can see which may suit you the most. Also read the Save the Student student bank account comparison.

PLEASE NOTE: This site currently compares student current accounts for 2012/13. To keep updated with new changes (in 2013 and 2014), please Join our Free Newsletter.

Student Bank Accounts

RankBankMax OverdraftIncentives & FreebiesOverdraft ChargesOther Catches
1Co-op logo Co-Operative£2000None18.9%Must deposit £300 when opening
2Halifax logo Halifax/HBOS£3000None24.2% + £28 a monthThe overdraft is not guaranteed.
3Santander logo Santander£1500£50 Bonus£5 a dayWorst unauthorised overdraft bank charge.
4RBS logo Royal Bank of Scotland£1,500Free Travel Card (Existing customers)£6 a day.Needs frequent use and deposits every 6 months.
5Natwest logo Natwest£1,50016-25 Railcard (Existing customers)£6 a day.Freebie only for current customers.
6HSBC logo HSBC£3000£15 per itemDifficult to achieve maximum overdraft amount
7Lloyds TSB logo Lloyds TSB£1500Free NUS extra card.8.2% + £15 a monthOnly best for 5 year courses.
8Barclays logo Barclays£2000Deals with Phones4u.£22 every 5 days until credited.Can be hard to increase overdraft

Check your credit rating for free

8 things to remember

Before you even start to consider which student bank account is best for you, be aware of the tricks and motives of the banks.

  1. Banks are desperate for students to open an account. Switch to get the best deals.
  2. Bear the motives of banks in mind!
  3. Don’t fall for cheap freebies (but someare worth it)
  4. The amount of interest-free overdraft should be your first priority.
  5. The advertised overdraft is the maximum you can get in final year. A low credit rating can mean you can’t get the full amount.
  6. Invest any unused overdraft in a flexible savings account.
  7. Check the interest rates on the overdraft for graduates
  8. Watch out for the bank charges for going overdrawn. Never spend beyond your means.

Student bank account freebies & incentives

Incentives will always be there to tempt you but it’s time to be financially savvy and look at the bigger picture. You don’t want to leave university with even more debt than you already will be through your student loan. Choosing the best student bank account can really save you money in the long run so it’s best to shop around, or just follow the advice below!

The first thing to realise is that incentives, freebies and so on are just there as a distraction. As alluring as the ‘benefits’ sound, they should not be the main reason for choosing a student bank account. It may be true that a number of student bank accounts offer freebies but many of them can turn out to be worthless. For example, a USB stick is not really a great freebie and the bank can make up the cost in bank charges in the future.

You can easily accumulate in excess of £26 worth of overdraft charges if you haven’t chosen the best student bank account. Banks know that many students are young, perhaps slightly naive and so use this to their advantage; offering a railcard or discount on mobile phone insurance is an easy sell to many. What you should be looking at is the maximum student overdraft…

Go for the largest student overdraft!

Best Student Bank AccountsThe student bank account with the largest overdraft should be one of the biggest draws. In other words, you want to choose the bank account with the biggest 0% borrowing for the longest period. This is particularly important if you go beyond your 0% overdraft as you will incur hefty bank charges, which obviously is something every student wants to avoid.

The Halifax student bank accounts offer one of the best deals on the market at the moment with a whopping £3,000 overdraft for up to five years. This is available from year one if you request it and is agreed.

Owen Burek of Save the Student! suggests: “If in your first year of university you feel you’ll need to borrow up to £1,500 as an interest-free overdraft, then Halifax’s student bank account is your best choice this year. Students also have the potential to raise this over the following years, however you should only spend what you are happy to pay back upon graduating.”

If you’re worrying particularly about money then this will be an advantage to many students. It is interest free until you graduate after all.

But… although it is possible to get a £3,000 overdraft, this amount isn’t guaranteed. Unless you have a great credit rating (which most students don’t) you probably won’t get this upper limit. You are given £500 automatically when you open your bank account and then have to apply for increases, which you will get depending on your circumstances.

For some students the thought of having £3,000 in their bank account in their first year of university can seem daunting. If you are lucky enough to be given the maximum straight away when opening a your bank account, then you still have to make it last for a full five years. If you’re not the best at managing your money this may be worth thinking about – you will have to pay it all back.

“Although interest free, £3,000 is a huge amount which you will have to pay back at some point. Whilst having a big student overdraft can be a real help for many, a smaller, staggered overdraft may be more suitable for students who are worried about overspending. To get the best student bank account in 2012, students need to look at a wide range of factors rather than just the overdraft,” explains Jake Butler of Save the Student!

Making the final decision on student bank accounts

When it comes to choosing the best student account you should choose the bank that is best for you. A high overdraft is important but if you are not going to need a huge amount and worry you will waste it then opt for an account with other benefits.

It’s important to look at every aspect of the account before making your decision as you don’t want to be stung by high charges that you didn’t know existed. So whether it’s a large overdraft, railcard or the location of your nearest branch that is most important to you make sure you make the right decision for yourself. Explore the rest of the site for much more on student bank accounts and finance more broadly.

By students

Hello! This website has been written by student money experts Save the Student! to give you an overview of student bank accounts and what they have to offer you.

The studentsWe review the benefits and catches of all student accounts so you can make an informed choice and avoid the traps!

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