Student Bank Accounts

Student bank accounts are accounts that are specifically aimed at students studying in higher education.

The banks tend to offer free gifts to students as incentives to encourage you to open an account with them. Read on to find out what you should consider when choosing a student bank accounts.

Most higher education students will use a student bank account at some time during their studies. The banks will normally offer you an incentive to bank with them in the form of a gift. Try not to be swayed by the gifts on offer and instead look at other more important aspects of the accounts on offer.

Interest free overdrafts

Student bank accounts come will with an interest free overdraft. This is when the bank lets you use some of their money while you are studying and doesn't charge you interest for using this money. It is worth noting that they are not giving you this money, it is in fact a loan that they will want back after you finish your course. We will come back to this later.

Most students will need to use some of this overdraft during your studies If you are planning to get a job over the summer, you can possibly repay some or all of the overdraft and then you can use it again in the next academic year.

Most students will say the interest free overdraft is the most important aspect of their student bank account.

Switching student accounts

Most banks offer student accounts to first year students. Most banks will let you switch either during your first year or later in your course. So if you discover a better account after starting at university you can apply to switch.

While switching is allowed, it's worth noting that you cannot have more than one student account at the same time. This doesn't stop you having other bank accounts so for example, you can have a savings account or other bank account running at the same time, and this may help you with your budgeting and planning.

Banking apps and budgeting

Some accounts are completely app based (so you will do all of your banking on an app). Alternatively, you may prefer to open a traditional bank account that offers an app and on line banking to manage your money on. The benefits of these apps tend to be you can use them to help with your budgeting, you can turn off certain types of spending (such as gambling) and you can do things like freeze your debit card if you can't find it.

Many of the banks now use Open Banking and if you give permission, this will allow you to see all bank accounts you have in one place which should also help with your budgeting.

Not from the UK

If you are a student from outside the UK you will not normally be able to access the same level of bank account as those offered to UK students. You are likely to need a bank account to pay your tuition fees and your rent as well as access money to live off. Most high street banks will offer basic bank accounts to students and these won't come with an overdraft facility but will enable you to access your money easily in the UK. Your university will be able to give you more information on this.

At the end of your course....

Your bank will continue to offer you the interest free overdraft for a certain length of time (normally about a year) and then convert your student account into a graduate account. This is when they will change your remaining overdraft into a loan and you will start to pay interest on any money you still owe them. Ideally try to repay the overdraft during this interest free period if you can. You can also look around for a better deal and switch graduate accounts.