Best student bank accounts 2017
Choosing the right student account can be a bit of a minefield… but not with our detailed comparison on what all the banks have to offer students in 2017/18!
Looking to open a student account but not sure which bank to go with or how to apply? Well you're in the right place!
We'll take you through all the important things to look out for when choosing a bank, plus review and compare the best student accounts this year in a clear comparison table.
Banks want YOU!
Banks are actively targeting students, more than any other group of the population.
There's good reason, too. Students are essentially investing in themselves to (hopefully) get a higher than average salary when they graduate.
Whilst you may be borrowing now to fund your education, banks expect that, in the near future, you will reap the rewards and they hope that you stash your high earnings away with them.
Banks are looking to establish loyalty, and have good odds at keeping you for life once you've opened a student bank account with them.
Just remember that you don't have to be loyal, and you should switch banks if necessary to benefit from the next best deal. It may seem like too much effort, but switching can pay dividends for many students and graduates.
Beware of the student bank account “freebies”
There's a whole lot on offer this year but don't be fully taken in by freebies! Short-term offers including free products, insurance, cashback rewards, “exclusive” deals and other useful things may sound very appealing but you need to be smart.
A student bank account offering free MP3 downloads worth £20 is nowhere near as good as getting a large interest-free overdraft for 3 years or more.
Go for the largest student overdraft
An arranged overdraft is a common way of borrowing money through your current account. The best thing about a student account is that money borrowed through an overdraft has 0% interest. With an interest-free overdraft you pay back nothing more than what you borrow. This is unique to student bank accounts, so take full advantage of it!
Even if you don't feel like you need the full overdraft, still apply for it then take some of it out (interest-free) to pump up your savings account.
Now you're playing the system! You actually make money by earning interest on the borrowed money whilst you're a student. We're not talking mega-bucks, but for something so easy to do, it's not a bad return!
Beware that the 0% interest period is not forever! It only lasts a certain number of years after you graduate before interest charges set in. You'll need to starting paying up before you start getting screwed by higher repayments. Just as importantly, don't ever go over your arranged student overdraft limit or you could suffer hefty bank charges.
Also, you should never go over your overdraft limit. The charges can be extortionate and could lead to even more debt. If you are ever near the limit talk to your bank.
Is the overdraft “up to” or “guaranteed”?
It's worth noting that the advertised student overdraft limit is often the maximum you can get. This amount is usually only available in your final year at university and only to students with a decent credit rating (see below).
For example, pretty much all of the high street banks attract students by offering an overdraft of “up to” £3,000. However we know that many students have claimed never to have received the full £3,000 at any point during university.
If you still need to know more about what an overdraft is, check out our guide here.
Know the repayment conditions
In a recent survey we conducted, 65% of students asked said they didn't really know when they have to repay their student overdraft. Sure, you probably won't have to repay it until after you graduate, but by then it can be too late and the sudden demand for £3,000 can be quite a shock!
After university, most banks automatically turn your student account into a graduate bank account which deals with repaying your overdraft over a certain period. Take a look at our graduate bank account guide which lists the top accounts on offer to graduates and gives you an idea of how much money you are likely to have to pay back and how quickly.
Know your credit rating
Finally, if you can find the time, it's worth knowing what the banks already think of you (from a risk point of view). The amount of overdraft they will award you depends on your credit score (spending history, past borrowing, income stream etc). There's more info on that here.
Luckily you now can get access your credit score for free with Experian CreditMatcher. We've used this service ourselves and it's the best we've come across.
Location, location, location…
A local bank can prove to be worthwhile, especially when you need to make a cash or cheque deposit, or hand over any documentation.
Having said that, don't make this your primary concern. You can withdraw money for free from other ATMs and with the increase in internet banking there are less reasons to head to your local branch these days.
Luckily, there's not too much! However at the least you will be required to show:
- One or two forms of photo ID: such as a passport or driver's licence
- Proof of address: such as a recent utility bill or bank statement
- Proof of student status: a letter of acceptance from your university, or UCAS offer letter.
Most banks now allow you to apply online for a student bank account, but you will still have to send off supporting documents or take them into your local branch. Documents must be original copies, not photocopies.
Hopefully things are a bit clearer for you now. With this information in mind, below are the best student bank accounts for this year, taking the overdraft interest-free terms into account.