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.

best student savings accounts

While 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 Donald Trump 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.

How to save money as a student

Student finance funding

It's not as difficult as you think! 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.

Nine easy ways to save money

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. Every time you get paid (or get a cash gift), skim a small percentage off and save it before you spend the rest
  3. Non-essential cash handout? Ask your folks to pay into your savings account instead
  4. Give up regular spends you can live without: cigarettes, magazines, pretentious coffees...
  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!
  9. Try the 1p saving challenge and save over £650 in just one year!

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

Things to do before opening a savings account

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

  1. Work out what sort of saver you are

    what kind of saver are you

    Credit: Disney Pixar

    Be realistic about the kind of saver you are. Are you someone who struggles to stick within budgets 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 your savings are protected

    protected savings

    Credit: Warner Bros

    Thanks to the Financial Services Compensation Scheme (FSCS), any money you put into a savings account will be protected up to £85,000 if everything goes to pan at the bank holding your money.

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

    So whichever bank you pick, make sure they're backed by the FSCS - just look for the logo.

  3. Don't get taxed

    how to avoid tax on savings

    Credit: Images Money - Flickr

    You'll be taxed on anything you earn above £11,850 in the tax year, and if you're earning above £17,500 you'll get taxed on the interest you earn from savings too (the first £1,000 of interest will still be tax free though!).

    Most students won't earn enough interest 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 or Lifetime 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 savings bot

    automatic money saving bot

    Credit: Rog01 - Flickr

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

    These apps work by squirreling away 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.

    Plus, who can resist the 5% interest rate?

  2. Be prepared to switch for more interest

    switch savings account more interest

    Some 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 the pound after the Brexit vote (ha... politics).

    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 you go for?

which savings account should you go for

There 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 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 for 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 account as part of the package - we've got the pick of the best below
  • Lifetime ISAs - Also known as a LISAs, these accounts could give you a whopping 25% bonus if you use them to purchase your first house. Start saving now to get the maximum bonus
  • Cash ISAs - ISAs allow you to earn tax-free interest on savings of up to £20,000. And while 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 options in our guide to the best ISAs for students.

The main decision you need to make at this point is: will you need access to 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 by going with a current account.

Best instant access savings accounts

best instant access savings accounts

Credit: TriStar Pictures

This 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 that 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 regularly as possible to keep up with the available rates. Please double-check with the websites by following the links.

Top instant access savings accounts:

  1. The Post Office Online Saver - 1.33%

    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 to just 0.25% 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 »

  2. RCI Bank - 1.3%

    Minimum deposit: £100

    Access: Online

    Withdrawals: Unlimited

    You might be interested to hear that RCI bank is owned by the car company Renault.

    It has a decent amount of interest but the £100 minimum deposit amount might put a few students off (even though you can withdraw down to £1 straight after).

    It doesn't have FSCS protection but uses a French equivalent so your savings are still secure up to €100,000.

    More Info »

  3. Coventry Building Society - 1.3%

    coventry building society best easy access savingsMinimum deposit: £1

    Access: Online

    Withdrawals: Three per year

    The Coventry Building Society Limited Access account is a great choice for most students as you can open it with just £1. What's more, after the initial 12 month interest bonus expires, it only drops to 1% - not the best, but not a disaster if you forget to switch straight away.

    However, be warned that you can only make a maximum of three withdrawals per year if you want to secure that top level rate. In other words, this probably isn't the account for you if you expect to be dipping in and out of your savings on the regular.

    You will need to open and manage the account online (more info via the link below).

    More Info »

Keen to learn more about how automatic savings apps and bots work? You've come the right place!

Best fixed rate savings accounts for students

best fixed rate savings accounts

Credit: BBC

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 five years.

Top fixed rate savings accounts:

  1. Atom Bank - Up to 2.5%

    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 one of the first banks 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 2.05% on your cash (this drops to 2.03% if you opt for monthly interest). This rises to 2.15% for two years (2.13% for monthly interest), 2.3% for three years (2.28% monthly), and 2.5% for five years (2.47% monthly).

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

    More Info »

  2. Masthaven - Up to 2.66%

    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.

    You may be a bit confused as to why we've ranked Masthaven below Atom, despite having a higher maximum interest rate, but we've done so with good reason - you should only go with Masthaven if you're in this for the medium to long haul.

    Stow your cash away for one year and you'll get 1.86% - far lower than Atom's 2.05%. But a two year bond with Masthaven pays 2.14%, while three years pays 2.32% and five years a whopping 2.66%.

    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 and savings accounts

best combined current and savings account

Credit: Warner Bros

If 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. Tesco Bank Current Account - Up to 3%

    Tesco Bank current account interestMinimum paid in each month: £750, with at least three direct debits out each month

    Access: Online

    Withdrawals: Unlimited

    With Tesco you can get 3% interest on your entire balance up to £3,000, which is a little short of Nationwide, but on a higher balance.

    What's more, you can open two accounts, meaning that as long as you fulfil the eligibility criteria (payments in, direct debits out), you could earn 3% interest on up to £6,000! That means you'd need six direct debits each month, but with your phone, internet, gas, electric, water and possibly some others like contact lenses, you could be there!

    There's also the added bonus of an extra Clubcard point for every £4 you spend in Tesco (boosted to one point per £1 until April 2019), or every £8 you spend elsewhere.

    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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