Choosing the right student bank account is an important decision, especially in these difficult economic times. Therefore, I have compiled a guide to help you choose the right student bank account.
What You Should Look For In A Student Bank Account
1. Interest Free Overdraft
By far and away the most important thing you should look for in a student bank account is the size of the interest free overdraft and how long it is available for.
2. Freebies
Banks often try to entice students to open up a bank account with them by offering freebies and discounts. Although some are useful (such as the 5 year Young Persons Railcard offered by Natwest) you should try to avoid falling for freebies, as they are short term, whilst you are likely to have your bank account for a long time.
3. Graduate Overdraft
You should also consider the graduate overdraft facilities that are offered by banks, as you are likely to end up still in your overdraft when you finish your degree.
A Comparison Of The Student Bank Accounts Available
| Bank | Interest Free Overdraft | Agreed Overdraft Rate | Freebies | |||
| 1st year | 2nd year | 3rd year | 4th year | |||
| Abbey | £1,000 | £1,250 | £1,500 | £1,800 | 9.9% | £50 cash deposit |
| Barclays | £1,000 | £1,250 | £1,500 | £1,750 | 8.9% | One free cinema ticket a month for 6 months |
| Halifax | £3,000 | £3,000 | £3,000 | £3,000 | 7.2% | 25% off AA membership in the first year |
| HSBC | £1,000 | £1,250 | £1,500 | £1,750 | 8.3% | Two years free travel insurance |
| Lloyds TSB | £1,500 | £1,500 | £1,500 | £2,000 | 8.2% | Free NUS Extra card, free YHA membership for a year and 35 free eMusic downloads |
| Natwest | £1,250 | £1,400 | £1,600 | £1,800 | n/a | Free 5 year Young Persons Railcard, £50 off mobile broadband from 3 and £100 off an Asus laptop |
| RBS | £2,750 | £2,750 | £2,750 | £2,750 | n/a | £100 off an Asus laptop, £50 off broadband from 3 and 2 for 1 on cinema tickets |
Note: The interest free overdraft amount is the maximum you can get according to the various banks websites, however you may be offered a lower amount.
The Top Student Bank Account
This years Money Saving Students top student bank account is Halifax, with an excellent £3000 interest free overdraft which is £250 more than its nearest rival RBS. Although its freebie is not that useful to most students, the size of the interest free overdraft makes it our choice.
The Alternative
If you do think you will use such a large overdraft, Natwest is a good alternative offering a free 5 year Young Persons Railcard saving you £120.
Top Tips
1. DON’T be fooled by short term freebies, an interest free overdraft is far more important.
2. Remember NEVER go over your interest free overdraft limit without asking. For example, if you have an account with Abbey, you will be charged 28.7% on unauthorised overdrafts.
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2 responses so far ↓
1 Steve // Aug 19, 2008 at 11:20 am
Cheers for this student account guide. Mr Martin of Lewis still hasn’t even brought out his guide yet.
2 Phil // Sep 19, 2008 at 6:46 pm
I’m with HSBC and pretty happy with them, overdraft rate is pretty high though. Have a look at my site, it’s similar to this one.
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