From interest-free overdrafts and cashback, to railcards and an annual Tastecard, there are plenty of freebies and perks on offer from student bank accounts this year.
If you’re heading off to university in the autumn, it makes sense to open a specialist student current account. You’ll benefit from a 0pc overdraft, which will help make budgeting easier as you deal with student finances, and you could get some freebies too.
Nationwide’s FlexStudent account has relaunched with a £100 cashback offer and £120 of Just Eat vouchers if you open the account and deposit £500 before December 13.
Meanwhile, Santander is giving students the chance to win up to three years’ worth of tuition fees if they pay £500 into their account by September 30.
Lloyds Bank has launched a £110 cash offer, with additional cashback perks and 20pc discount on Student Union events.
These offers join NatWest’s and Royal Bank of Scotland’s (RBS) incentive of £100 cash and an annual Tastecard (worth £55 a year) that gives you discounts on meals out.
Other banks are offering cashback of up to 15pc when shopping with certain retailers, while Santander is also giving away a four-year 16-25 railcard worth £100 – handy if you use the train to get home.
Here, Telegraph Money reveals the best student accounts on the market for 2024.
A student bank account works in the same way as a “normal” current account, just with some features that are more suited to those in higher education – namely an interest-free overdraft that lasts throughout your degree.
Note that when your time in higher education has finished, your account will usually convert from a student account to a graduate or standard current account.
This means you’ll lose the student overdraft facility, so you’ll either have to pay off what you’ve borrowed, or face paying interest. Some banks will offer an interest-free overdraft on their graduate account that gradually reduces each year. Your bank should get in touch in plenty of time before this change takes effect.
Depending on which provider you choose, you may be able to complete the account opening process completely online or via its mobile banking app.
Every bank will need to verify your identity before the account can be opened, which means you’ll need to send copies or photos of documents such as your passport, driving licence or birth certificate.
In addition, you’ll need proof of being in further education, so you’ll need to provide your UCAS code and either confirmation of an unconditional offer, a letter from your university confirming your place, or proof of A-level results that show you’ve achieved the grades set out in a conditional offer.
Rules may vary between banks, but you can usually open a student bank account a couple of months before your course is due to start.
By law, you must be at least 18-years-old to get an overdraft on your account. But some student bank accounts, including Lloyds, TSB, NatWest and RBS can be opened from the age of 17.
Getting a student account can be an exciting time – particularly if you haven’t had much experience managing your own money before.
The best account choice will depend on your preferences, so think about whether a bank has a branch in your university town, should you want to visit with any questions.
One provider might offer a student account perk that particularly suits you – such as a student railcard, which could save you a lot of money if you’re moving a long way from home.
Weigh up the pros and cons of each option, as we highlight some of this year’s best features.
It’s quite unusual for a student current account to pay interest on the account balance – possibly because of the assumption that many students will spend much of their time in their overdraft.
But, if you know you’re unlikely to go into negative numbers, your best bet is TSB, which pays a generous rate of 5pc on balances up to £500. Elsewhere, Lloyds Bank pays 2pc on balances up to and including £5,000.
With Halifax, you can earn 0.5pc on any account balance.
The most generous interest-free overdrafts are with NatWest and RBS, offering up to £3,250 in the third year of study. In year one and two, they both offer up to £2,000, limited to £500 in the first term of year 1.
Below this, HSBC and Nationwide Building Society offer up to £3,000 in the third year of study. In year one, they both offer up to £1,000, rising to £2,000 in year two.
Lloyds Bank’s student account offers an interest-free tiered overdraft of £1,500 in years one to three, which can be extended to £2,000 if you’re studying for longer, available for years four to six.
A 0pc overdraft is particularly handy for students, who may have expenses to pay such as rent before they receive any student loans or grants. However, care must be taken to ensure you don’t breach the overdraft limit, or you could be liable for fees and interest of up to 40pc.
Some banks offer overdrafts that are “guaranteed”, while others offer “up to” overdrafts, which depend on your credit record.
The HSBC student account offers a guaranteed £1,000 interest-free overdraft in the first year, but the higher limits aren’t guaranteed in later years.
Katie Brain, banking expert at Defaqto, said: “Most students need access to an arranged overdraft to help with their living expenses. It is always important to remember this is a debt that needs to be paid back, so use it sparingly.
“Some providers also require a minimum amount to be credited to the account each term to qualify for an overdraft or extended amount.”
Santander, for example, will automatically give you a £250 overdraft, rising to £1,500 in the first year if you pay in at least £500 every four months. Your overdraft will then automatically increase each year.
The best freebie depends on what you actually want and might use. A free railcard has little value if you rarely take the train, while a free Tastecard is of limited use if you don’t plan to eat out often, perhaps because your student accommodation is catered.
Students looking for some free money – that doesn’t need paying back – should consider Nationwide, NatWest and RBS.
Like last year, NatWest and RBS are offering an £100 bonus, plus a free four-year Tastecard, which gives 25pc off food or two-for-one meals at certain restaurants.
Nationwide is again offering £100 in free cash, but has thrown in £120 of Just Eat vouchers into the bargain.
Lloyds Bank has recently launched a £110 cash offer, as long as you pay in at least £500 between August 1 and October 31. It also offers a 20pc discount on Student Union events for the 2024-25 academic year, and its Everyday Offers means you can earn up to 15pc cashback with certain retailers, including Asos and Sainsbury’s.
Halifax currently only offers cashback of up to 15pc when shopping with certain retailers.
Santander’s student account is slightly different this year.
As in previous years its free four-year 16-25 railcard gets you a third off rail travel in the UK. A three-year railcard costs £70 and a one-year card costs £30, meaning you save £100.
But you’ll also have the chance of winning up to three years’ worth of tuition fees. A total of 20 students will each win £27,750 and 30 students will each win £9,250.
You can also sign up for Santander Boosts to receive cashback, offers and prize draws from brands including Tesco, Decathlon and Caffe Nero.
If you plan to travel a lot, the only provider with a student account that is fee-free when used overseas is Nationwide.
Using other debit cards abroad can see you get stung with charges of up to 5.9pc, which if you’re going away for several weeks can add up to more than £100.
Student credit cards work in the same way as normal credit cards, except that they accept students.
Given most students will have what’s called a “thin credit file” – that is, they won’t have held many financial products or have enough information on their file to prove to a bank that they are a trustworthy borrower – often your only credit card choice will be the same provider as your student current account.
Note that student credit cards are likely to have low credit limits and high interest rates, so they’re not ideal for borrowing – if you decide to get one, make sure you can pay it off in full at the end of each month.
Typically, you can only have one student bank account at a time, since some will require you to set up your student loan payments to go into the specific account in order to get the perks. Some accounts may not have these restrictions, so be sure to check the terms before you open a new account.
If you have a student account and want to switch elsewhere, you may be able to do so, but it may affect the perks you can get from both your existing and new accounts. Some accounts also only accept students beginning the first year of their course. Again, the terms will explain this.
