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Student bank accounts

Jafar Hassan
Written by Jafar Hassan, Content editor

Edited by Marianne Curphey, Finance Writer, 22 April 2022

Learn more about student finance, and the benefits of a student bank account to prepare you for university and graduation.
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Student bank accounts
Student bank accounts

It's not the most exciting part of going to university, but choosing the best student account for you could make your time studying, and the first few years after you graduate run more smoothly.

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Compare current and student bank account providers to see if you can find an account that suits you while you study. From interest-free overdrafts to managing your finances after you graduate, our guide to student bank accounts can help you stay financially sound while you study.

What are the advantages of a student bank account?

The advantage of a student bank account is that it's specifically designed for the needs of students, and to make the financial side of university life less of a trial.

The main benefits of a student bank account are the interest-free overdraft options that many of them come with. While you study, your overdraft will be interest-free up to an agreed limit, which in some cases increases each year of study.

After you graduate, you will start paying interest on some or all of the balance of your overdraft. Student bank accounts also have other perks, like exclusive discounts, free gifts and dedicated student finance advisors.

Some student bank accounts will have interest-free overdrafts for the duration of your degree and for a period after you graduate, allowing you time to pay it off once you start working. You should make sure you pay this off as soon as possible to manage your debt and avoid any unnecessary interest payments.

Who can have a student bank account?

Each bank has slightly different rules about who will qualify for their student bank account. As a general rule, if you’re studying full-time for a degree, a degree-equivalent or a postgraduate course, you should qualify.

However, some banks will accept people who are on non-degree or other higher or further education courses – so if you're in any doubt about whether you qualify, check with the bank.

The law in the UK doesn't allow for under 18's to get an overdraft. Should you open a student account before you're 18, you can apply for an overdraft once you turn 18.

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Part-time students are less likely to qualify, as they're often able to work full-time while they study. So you may want to check with your learning institute to see what financing options you have to help you along the way.

Pick the best student account for you

How will you use your account?

If like most students, you need to borrow some money to help you through university (in addition to your student loan) then the overdraft will be the most important thing to think about when you choose your account.

You can get an interest-free overdraft of up to £3000, but don't automatically pick the biggest one - you should think about how much you actually need to borrow. Then look at the interest rate you will eventually have to start paying too.

What happens to the student bank account when you graduate?

It's worth thinking about what happens to the account after you've finished university. For example, how soon will you have to start paying off your overdraft, what rate of interest will you have to pay, and will you get any extra perks or services as a graduate? These vary from account to account.

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However, remember that you aren't tied to your student bank account once you graduate, and you can switch to a different account, or even a different bank, if you find a better offer later on.

Student bank accounts usually maintain your student overdraft rate for one year after you graduate, but this varies with each provider.

Once you start working, it makes sense to set aside some of your monthly income to pay off your balance as soon as possible. Having overdraft debt could affect your credit score if you plan to apply for a credit card, a loan or mortgage.

Plus, new graduates tend to have a lower credit score than most people, as they haven't yet had a chance to show that they can manage credit and pay off debts on time.

What gifts or freebies are on offer?

Many banks offer incentives like discount schemes, rail cards or cash in return for opening a student bank account.

Don't be swayed too much by freebies – there's no point getting an account that doesn't suit you just because they give you travel discounts – it could end up costing more in the long-term.

What other services are available with the student bank account?

Ask what sort of debit card you get and where can you use it. You'll also want to think about whether you can get a student credit card from your bank.

Being able to get a credit card early on can help improve your credit rating, and if you can prove that you can manage credit, then by the time you graduate you could be ready to apply for other credit products as and when you need them.

Top Uswitch tips for student bank accounts

  • Don't choose a student account based solely on the freebies. Consider the overdraft options and any associated fees

  • Don't be afraid to switch if your current account doesn't suit your needs. It's most important to take advantage of the full benefits of a student account.

  • Consider interest free overdraft options. You only have to pay back what you use/borrow. Make sure you can manage your finances once this incentive comes to an end

  • Be sure to know how much your overdraft actually is, so that you don't incur any fees for going over the given amount

  • Keep an eye on your credit score. Having an overdraft is considered a form of borrowing, so don't allow misuse of your account to have a negative effect on your credit rating

Switch to a better current account

Compare current accounts from different providers and find a bank that works for you.

Read more ...

  • What is an overdraft?
  • Switching your current account: step by step
  • Compare Credit Cards and Find the Best Credit Card Deals