Budgeting & Banking

Best student savings accounts

Forget sticking it under the mattress: if you want the biggest bonuses, you need the best savings account. Here's how to get more bank for your buck.
moneybathWhile we can't promise bathtubs full of dollar by the end of your first term, a high-interest savings account can net you no-effort earnings on any spare cash you might have.

As you're probably aware, interest rates in the UK leave much to be desired at the moment, but don't let that put you off! We've got tip-offs that could see you earning as much as 5% interest on your savings.

Remember that savings accounts aren't just for those with big bucks, either – some accounts ask for as little as £1 to open, and you can save as much or as little as you like.

So whether it's money from a part-time job, birthday cash from your folks, or student loan leftovers, make sure you put it to good use!

Banks change interest rates more often than Kanye trades insults! We'll keep this page updated with the latest rates, so make sure you bookmark and check back regularly to ensure you're still getting the best deal.

Can I really save cash as a student?

Dice on keyboardCredit: Dennis Skley – FlickrIn a word – yes! Even if you stash just a fiver a week into a savings account, you'll have £260 after a year. Anything you earn on top of that in interest is free bonus money.

Your saving mantra is simple: save more when you can afford it, save for longer, and get the best interest rates. That's it.

7 ways to save

Squirreling away spare cash isn't easy on the average student budget. The trick is to start small but stay consistent:

  1. Regularly empty out loose change from your purse, pockets or wallet. Leave it to brew in a jar until you can get to the bank
  2. Skim off something every time you get paid (or get a cash gift) before you spend it
  3. Non-essential cash handout? Ask your folks to pay into your savings account instead
  4. Give up regular spends you can live without: cigs, mags, pretentious coffee…
  5. Never wear it, don't use it, or can't stand the sight of it? eBay it, then bank it.
  6. If you're ultra disciplined – and don't need the money immediately – transfer funds from a 0% overdraft to a high-interest savings account to earn extra on it instead
  7. Use your budget to identify any spare cash at the start of each term and stick it in your savings account
  8. Make use of an automatic savings app – these save on your behalf without you having to do a thing!

Got any saving tips that worked for you? Share in the comments box below!

Before opening a savings account…

Before you start doing your research and decide which savings account to go for, there are 5 important things to think about.

  1. Work out what sort of saver you are

    forget to saveBe realistic about the kind of saver you are: Are you someone who struggles to stick within budget and often needs to dip into emergency funds, or can you afford to stash some cash away and not touch it for a few years?

    Get too ambitious at this stage and you could end up losing all your interest if you have to withdraw early, so it's important that you're honest with yourself before choosing which account to go for.

  2. Make sure you're protected

    Dial of a bank safeThanks to the Financial Services Compensation Scheme (FSCS), any money you put into a savings account will be protected up to £85,000 if the bank your account is held at crashes.

    You'll get your money back within 7 days if the bank fails, and the process is automatic, so no need to claim.

    Whichever bank you pick, make sure they're backed by the FSCS – look for the logo.

  3. Don't get taxed

    Boot playing piece on Monopoly board (income tax tile)You'll be taxed on anything you earn above £11,500 in the tax year, and if you're earning above £17,000 you'll get taxed on the interest you earn from savings too (but the first £1,000 of interest will still be tax free).Most students won't earn enough in the year to get taxed on their savings, but that doesn't stop banks automatically nipping the tax off before paying interest – make sure you watch out for this!

    You can always ask for it back or, to save the hassle, make sure you fill out a R85 form when you open your account so all interest is paid in full.

    Alternatively, if you're in it for the long haul (e.g. planning on saving long term for a deposit on a house or something similar) go for a tax-free ISA instead.

Stumped when it comes to tax? Our guide to tax facts for students has the answers!
  1. Struggle to save? Try an automatic saver

    distracted by phoneIf you struggle to commit to saving cash regularly, it's worth looking into an automatic savings app.

    These apps work by squirreling a way cash into a virtual savings bot on your behalf – sometimes a couple of quid; sometimes the price of a meal – depending on how much its software has calculated you can spare.

    And who can resist the 5% interest rate?

  2. Be prepared to switch for more interest

    make your savings lastSome instant access savings accounts tempt you in with generous interest rates that include a one-year bonus, or a variable rate that can plummet faster than Nemesis.

    Being savvy with your savings is all about staying in the loop: Keep an eye on interest rates, cause unless you go for a fixed-rate option, these will fluctuate. And if you find a better rate elsewhere – switch!

    Make sure you keep an eye out and switch when the rates drop (bookmark this page so you can come back to it when it's time to find a new account).

    It's your money, so make sure you're getting the most from it!

What kind of savings account should I go for?

Unluckeh pigThere are lots of savings accounts to choose from and each have their own benefits.

Note that if you're earning £17,000 or more a year, you'll pay tax on any interest you earn on your savings above £1,000.

If you're not working, or are earning below £17,000 when your savings interest is included, you won't pay tax on savings at all (keep an eye on this, and if the bank accidentally taxes you when you're earning below the £17,000, make sure you claim for a refund!).

If you're worried about getting taxed on your savings, an ISA would be your best bet. More on this below!

  • Instant access savings accounts – You can withdraw money straight from the account with no notice, but tend to get stuck with lower interest rates in return. A good option for those who don't have loads to spare but want to make a bit extra without locking away emergency cash.
  • Fixed savings accounts – These accounts offer a slightly better rate of interest, but you'll normally have to fix your money in them from three months to five years. Some also have a minimum deposit amount, and in most cases withdrawing money means you'll forfeit the interest.
  • Current accounts – Some current accounts come with a savings accounts as part of the package – we've got the pick of the best below.
  • Cash ISAs – ISAs allow you to earn interest free of tax on savings of up to £20,000. And whilst most students don't earn enough (or save enough) to pay tax, an ISA could set you up for better savings in the future. We cover the best ISAs for students in this guide.

The main decision you need to make at this point is: will you need to be able to access your savings instantly, or can you bear to lock it away safely for a year or more to earn some decent interest? If the latter, you can get better rates with a fixed savings account.

If you've got a regular income, you could grab the best rates going with a current account.

Best instant access savings accounts

Tiny turtle - show me the moneyThis section has the best instant access savings accounts for students. Easy access savers pay reasonable interest normally for the first year and allow you to access your money whenever you need it.

Another major bonus is they have a very low minimum deposit amount. Just make sure to ditch and switch when bonus rates drop-off after 12 months!

Due to the highly volatile state of the financial market, banks are changing their interest rates almost monthly which means that this article will be updated as much as possible to keep up with the available rates. Please double-check with the websites by following the links.

Here are the current top two:

  1. Chip – Up to 5%

    chip-logoMinimum deposit: No minimum

    Access: Online via app

    Withdrawals: Unlimited

    Chip is quite different than the other savings accounts in this list as it's part of the new craze of automatic savings apps appearing on the tech scene at the moment.

    When you open a Chip account, you will have an instant 1% interest rate that's applied monthly and paid quarterly to your account.

    This will go up by a further 1% for every friend you refer to the app (up to 5%) OR you can skip all that effort and use our exclusive link to get an instant 5% rate on your savings (you're welcome!).

    The most interesting thing about this account is that you don't have to do any of the savings yourself – you hook up your current account with your chip account, and the app will monitor your incomings and outgoings, squirreling away any cash into your savings that the app thinks you can afford.

    On top of this, you're able to manually transfer up to £100 a day – so you can really take advantage of the interest. However, please note that it's likely these high rates won't stick around forever!

    Your saved cash will be completely safe if Chip was to go bust as your money is held digitally in an account with Barclays. However, in the unlikely event that Barclays were to go bust, you wouldn't be covered by their FSCS protection.

    More Info »

Keen to learn more about how automatic savings apps and bots work? You've come the right place!
  1. The Post Office Online Saver – 1.01%

    postofficephoneMinimum deposit: £1

    Access: Online

    Withdrawals: Unlimited

    Not only do you get unlimited withdrawals on this account, but you can also choose if you want your interest paid monthly or annually.

    The interest rate will drop by 0.76% after 12 months though, so once a year is up, it's definitely worth going back to the drawing board and shifting your cash to another easy access saver.

    More Info »

Best fixed-rate savings accounts for students

grow money save
If you can afford to put some money away for a while, you'll make the best interest on your savings with a fixed-rate account.

Just make sure you can actually afford to stow this cash away – some banks will take away your interest completely if you withdraw early, or even charge you a fee.

Please note that the interest rates mentioned below are the maximum you can get, and getting the max. rate will often mean committing to locking your cash away for up to 5 years.

Here are the current top two:

  1. Atom Bank – Up to 2.25%

    atom bankMinimum deposit: £50

    Withdrawals: One to five years

    Interest paid: Annually or monthly (you'll get a slightly lower rate if you choose monthly)

    Atom is unique in that it's the first bank to operate entirely from an app.

    They currently offer the best interest rate on the fixed-rate saver market, and despite being entirely run through smartphones, you'll still benefit from full FSCS protection on your savings.

    The amount of interest you receive depends on how long you're willing to save your cash for, and whether you prefer to have interest paid monthly or yearly.

    A one-year term gains you 1.6% on your cash (this drops to 1.59% if you opt for monthly interest). This rises to 1.7% for two years (1.69% for monthly interest), 1.9% for three years (1.88% monthly), and 2.25% for five years (2.23% monthly).

    Note that additional deposits aren't possible and early withdrawals aren't permitted with Atom Bank. Therefore, make sure you're 100% sure you can afford to save your cash before you commit!

    More Info »

  2. Masthaven  – Up to 2.06%

    Masthaven logoMinimum deposit: £500

    Withdrawals :  One to five years

    Interest paid: Annually or monthly (you'll get a slightly lower rate if you choose monthly)

    Masthaven are relatively new to the banking scene (going since 2004), but don't let this put you off benefitting from their good interest rates – they still have full FSCS protection.

    With a fixed term savings account with Masthaven, you'll get 1.25% if you stow your cash away for one year (1.24% with monthly interest). This goes up to 1.58% for two years (1.57% monthly), 1.76% for three years (1.74% monthly) and 2.06% if you lock your cash away for five years (2.04% if you go monthly).

    As with Atom Bank, early withdrawals are not permitted with a Masthaven fixed-rate saver, so only sign up to this if you're totally sure you can spare the cash for a year or more.

    More Info »

Best combined current/savings accounts

Handmade purseIf you're super sensible with your cash – and are self-disciplined enough to have your savings sitting in your current account – you could earn double the interest that a traditional savings account can provide by choosing a current account with an attached savings pot.

The only condition is that you must pay in a set amount every month to these accounts – ranging between £500 and £1,500. This could be from a part-time job, your student loan, or parental support, but for the average student this would probably still be a challenge.

However, if you do happen to have a chunk of savings in an instant access savings account you could set up a standing order to deposit cash from there each month so you benefit from the higher interest – and remember, you can transfer money out of these accounts whenever you need it!

Here are the current top two:

  1. Nationwide FlexDirect – 5%

    nationwideMinimum you have to pay in each month: £1,000

    Access: Online

    Withdrawals: Unlimited

    With this account, you'll get a whopping 5% on balances between £1 and £2,500 (no interest paid on anything above that) for the first 12 months.

    The catch is you need to deposit at least £1,000/month to retain the rate, and not from another Nationwide personal account.

    More Info »

  2. Santander 1-2-3 Account – Up to 1.5%

    santander_student_Bank_AccountMinimum paid in each month: £500

    Access: Online

    Withdrawals: Unlimited

    You get 1.5% interest on your entire balance of up to £20,000 – so across both your savings account and the attached current account.

    You'll also score some extra perks with up to 3% cashback on bills you pay through the account, including 3% on your mobile phone and broadband bills, 2% on energy bills and 1% on water bills.

    You need to pay in £500 a month, and this cannot be transferred from another personal Santander account. There's also cashback on purchases, and the monthly fee for the account is £5.

    More Info »

Already thinking about saving for your first flat? The new Lifetime ISA could see you benefit from a 25% bonus from the government!

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