Choosing a student account that’s right for you.
Each year, banks and building societies announce their student bank account packages to what is undoubtedly a captive audience. They tend to do so in the spring so that gives you plenty of time to make your choice.
The banks offer financial incentives to open a student account with them, as they know that the majority of customers will stay with them through, not only their period at university, but into their working life and beyond into retirement. During your relationship with them, they will hope to sell you other services and products such as credit cards, loans, mortgages, savings accounts and insurance based products all of which are very remunerative to them.
In this Article
What is a student bank account?
It is a current account that allows you to pay money into it, withdraw cash and pay for one off and regular bills.
For instance, you could have your student loan monies, funds from your parents or money that you earn from a part time job paid into a student account. You could take cash out using the debit card that is provided from cash machines and the card could also be used to buy items in shops, online or over the phone. You could also set up direct debits and standing orders to pay regular bills such as your mobile phone and rent.
Who offers student bank accounts?
Many of the major banks and building societies provide student accounts so it is worth shopping around to find the best student bank account that meets your requirements, as they may provide varying levels of facilities and incentives.
Who can open a student bank account?
The qualifying criteria may vary between different financial institutions. Some may say that you just need to be studying in higher education or others may insist that you are taking a degree course.
How do you apply?
You can call into a branch of the bank or building society or in some cases you might be able to apply online. They will no doubt ask you to provide them with confirmation of your course from UCAS. prove where you live and identify you. The bank will undertake a credit reference search.
What financial incentives are offered to you to open a student account?
This varies between the banks and building societies so it is worth shopping around.
offer an interest free overdraft facility for a period of time, pay interest on creditor current account balances plus some will offer other incentives such as a choice of a Young Persons Railcard for a number of years, free music albums, travel insurance discounts or Taste Card membership (this provides reductions on meals at numerous restaurants) and shopping discount cards.
Some may provide a student credit card although, if you do not clear the balance by the required date, you are likely to have to pay interest.
Do they offer an overdraft facility?
Taking a university degree course is a costly experience for many students and, whilst it would be preferable not to have to borrow money to get through it, many students do need financial assistance. That could come either in the form of a student loan, parental support, help from your bank that could provide an overdraft facility or a combination.
An overdraft facility is where the bank is agreeable to you borrowing money using your student current account as the vehicle to do so. They agree with you the maximum amount that you can borrow (overdraft limit). The balance of your account may fluctuate between sometimes being in credit and sometimes overdrawn as monies go in and out of your account often on a daily basis.
You will find when shopping around for the most suitable student current account that the terms of the interest free overdraft facility may vary. For instance, one bank may offer an interest free overdraft facility of up to ?1,000 in the first year, ?1,250 in year two and ?1,500 in the third year. Another may offer up to ?3,000 in year one.
Do remember that, whilst it may be tempting to borrow money in this way, that at some point it will need to be repaid – preferably by the end of the interest free period otherwise you may have to pay interest on any overdrawn balance remaining or transfer the debt to an interest bearing loan account and repay that over a period of time.
What are graduate accounts and what are the benefits?
Having obtained your degree and a job you may have the option to switch your student account to a graduate account with your bank that may include the benefit of an interest free period in which to repay your overdraft.
Hopefully, the above has been of assistance in your search for a suitable student bank account.