Last updated: 23/07/2020 | Estimated Reading Time: 4 minutes
Student current accounts
Heading off to university is an exciting and transformative experience for anyone, but in order to make the most of your time and money, you’ll want to make sure you’ve got the right student bank account.
We’ll explain what sort of things you could expect from the best student accounts on the market, and help you work out how to get the one that’s right for you.
In This Guide:
- What happens when I graduate?
- Who can open a student account?
- Advantages of student accounts
- Picking the right student account
- Student credit cards
What happens when I graduate?
You will be free to cancel your student account and switch to a conventional current account with the same, or a different provider at any point. You won’t be tied in any way to your student account after you’ve graduated.
The biggest thing you should be thinking about at this stage though is your overdraft and, in particular, when the interest kicks in.
Who can open a student account?
Contrary to what you might think, student accounts aren’t only for undergraduates entering into university. Different banks will have slightly different requirements but in general if you’re studying full time, either for a degree or equivalent or for any postgraduate course then you’ll be able to open up a student current account.
Some banks will accept applicants who are on various kinds of non-degree study programs. If you’re unsure in any way about whether or not you’ll qualify, the best thing you can do is simply get in touch with the bank you’d like to be with and they’ll let you know.
Advantages of student accounts
There are various aspects of student current accounts designed to suit the various particular needs of students in the UK. We’ll go over some of the key benefits of these specialised accounts in this section:
Interest Free Overdraft Facilities
One of the biggest attractions of student accounts is that they tend to come with an optional interest-free overdraft facility.
This can be very helpful for students who don’t have time to work and are relying solely on a maintenance loan to fund themselves.
Generally, the amount that you can be overdrawn without paying any interest will increase each year, sometimes up to a maximum of £3,000. This increase might happen automatically, or you might have to go into a branch to request it.
It is important to be careful with an overdraft though, while it is helpful in the short term, you will have to pay it back and so it’s important not to simply consider it to be free money.
Generally, the overdraft associated with your student account will remain interest free for up to a year after you finish your course, but each bank will have a slightly different policy on this score. You should start putting money aside to pay off your overdraft as soon as you start working so that you don’t get stung by interest rates in the future.
Freebies and Perks
Another thing that makes student accounts more attractive is the variety of free goodies that are often bundled in with them.
From railcards to MP3 players, many banks will offer free extras to those opening student current accounts. Exactly what perks you’ll be offered, if any, will vary greatly from bank to bank, so compare different accounts to see what kind of benefits you could enjoy.
Banks are aware of the fact that those entering university are often about to be fully financially responsible for the first time. As such, they are usually more than willing to offer a lot of financial advice to those opening student accounts.
Picking the right student account
There are a wide range of student accounts available in the UK, and choosing the right one is simply a matter of working out what you value most when it comes to banking.
If you’re set on being able to spend a little more than you would otherwise have each year, then picking an account with the biggest interest-free overdraft will be best.
If you think you’ll be able to manage without the biggest overdraft, but you do think you’ll be travelling up and down the country often, then a bank that bundles a railcard in with their student account will be the one you should do business with.
Or if you simply want the peace of mind that comes with readily available financial advice, then perhaps pick a bank that has a branch on your campus.
Whatever you’re after, compare student accounts with Money Expert to see what kind of things you could be benefitting from.
Student credit cards
Some banks will offer student credit cards with their student accounts. These can be a good idea if used responsibly but, as with an overdraft, you should always be careful when spending money that you don’t have.
Additionally, unlike the overdraft facilities offered, a student credit card won’t be interest free so you’ll want to make sure that each month, you have enough money available to pay off as much of the balance as you can.