Once you’ve finished your A-levels or Scottish Highers you may wish to open a student bank account.
In this article NimbleFins explains how student bank accounts work, the benefits of opening one, plus a list of the best accounts available right now.
What is a student bank account?
Targeted specifically at first-year university undergraduates, many student bank accounts come with a generous 0% overdraft (if you're 18+), along with a host of freebies from railcards to free cash.
To put it bluntly, If you’re in higher education and choose to stick with your bog-standard bank account then you could be missing out.
Even if you haven’t already started university, as long as you’ve completed your A-levels, or ‘Highers’ in Scotland, then it’s likely you can already apply for a student bank account. You’ll just need to provide ID, along with proof that you’ve secured a place at university.
It’s worth knowing that you won't usually be able to open a student bank account when you’re in your second or third year of university. So, if you want a student account it’s really important you get one while you’re a first-year student.
If you aren't happy with your student account halfway through your course then you may be able to switch accounts, though this will vary by provider.
What are the best student bank accounts right now?
Right now, there are a host of student bank accounts offering perks in order to entice the next generation of students. Here’s our pick of the top accounts...
Santander 123 Student — Guaranteed 0% overdraft + free 4yr railcard
The Santander 123 Student account offers account holders a guaranteed £1,500 0% overdraft every year for the first three years of studies.
If your course lasts for five years then you’ll be offered a higher £1,800 overdraft in year four, and £2,000 in your fifth year. To get a 0% overdraft you need to pay in at least £500 into your account each term.
On top of its overdraft offering Santander also gives a free four-year 16-25 railcard worth £100ish. To get the railcard you just need to register for online banking.
HSBC Student — Another guaranteed 0% overdraft, plus £100 cash
Open the HSBC Student account and you’ll get a guaranteed £1,000 0% overdraft. Depending on your credit score this could rise to up to £2,000 in year two, and to up to £3,000 in years three and beyond.
On top of the 0% overdraft you’ll also get £100 cash for opening the account, along with a free one-year subscription to the mental wellbeing app, 'Headspace'. To get both perks you’ll need to use your HSBC debit card at least 5 times within 30 days of opening your account.
NatWest Student — 0% overdraft + free 4yr Tastecard
The NatWest Student account comes with a guaranteed £500 0% overdraft for your first term. Depending on your credit score, you can ask for this to be increased to £2,000 until the end of your second year, and then up to £3,250 for your third year.
Aside from this overdraft, you’ll also get a code to redeem a free four-year 'Tastecard' which you can use to get discounts at restaurants across the country.
Nationwide FlexStudent — Non-guaranteed 0% overdraft, plus £100 cash
The Nationwide FlexStudent account also offers a 0% overdraft but — unlike the accounts above — this isn’t guaranteed to all account holders. However, assuming you’ve a decent credit score than you could get a 0% overdraft of up to £1,000 in year one, up to £2,000 in year two, and up to £3,000 in years three and beyond.
You can also get £100 if you pay at least £500 into your account by 15 December.
Lloyds Student current account — 0% overdraft, plus £100 cash
Similar to the Nationwide account above, the Lloyds Student account offers a decent 0% overdraft as long as you’ve a decent credit score.
If your credit score is decent then you could be offered an overdraft of up £1,500 in years one to three, and then up to £2,000 for any subsequent years of study.
Alongside the 0% overdraft, you can also bag £100 cash as long as you open an account and deposit at least £500 by 31 October. The account also pays 2% interest on balances up to £5,000, though this rate can be easily beaten by a normal savings account.
Will I be credit-checked if I apply for a student bank account?
Yes. When applying for a bank account you’ll undergo a hard credit check. This is done for the bank’s benefit in order to determine your suitability for an account. To learn more about what these checks mean, see our article that explains hard vs soft credit searches.
What happens to a student bank account after you graduate?
Just like university, student bank accounts don’t last forever. Once you’ve finished your studies your bank will usually transfer your student account to a graduate bank account, which may or may not be as generous.
Some graduate accounts offer decent perks for up to 3 years after you graduate. However, if you don’t have a need for a long 0% overdraft — which are common with these types of accounts — then you may be better off switching to a normal bank account instead.
And remember, just because you were happy with your old student account, there’s no obligation to continue with the same banking provider after you graduate. In personal finance circles, loyalty rarely pays, so always compare accounts to ensure you’re getting a good deal.
So, in summary…
- Student bank accounts are targeted towards first-year university students.
- They usually offer decent perks, from free cash, railcards, to generous 0% overdrafts.
- Not all student bank accounts offer a guaranteed 0% overdraft — some will only give you a 0% overdraft if you've a decent credit score.
- You will be credit-checked when applying for a student bank account.
- Once you graduate, your student bank account will normally be transfered to a graduate bank account — though there's little reason to stick with it if it isn’t competitive.