Here are the Best Student Bank Accounts in 2020

Not sure which is the best student bank account in 2020? Here’s everything you need to know.

A student bank account isn’t necessary for your studies, but it's definitely worth looking into. These accounts offer additional financial support for students and often come with benefits for signing up.

Not every student bank account will be the right fit for you, so it’s worth doing some research before making any decisions. We’ve put together a guide covering the best student bank accounts in 2020, so you can make the most of your money while you study.

What's in this guide?

Looking for some specific advice? Here's what's covered in this guide.

👉  What is a student bank account?
👉  What's the criteria?
👉  How to budget
👉  Things to consider
👉  Everything you need to know about overdrafts
👉  About your credit score
👉  How to switch bank accounts
👉  What are the best student bank accounts in 2020?


What is a student bank account?

New students become eligible for a student bank account when they start their studies, and these accounts often come with a bunch of benefits. From interest-free arranged overdrafts to cashback offers, a student bank account can be really beneficial throughout your studies.

You’ll need to prove that you’re a student when you apply as student bank accounts are only available to those currently in their studies. When you graduate, your account will automatically convert into a graduate account. Your bank will provide some warning about this beforehand.

Every bank is different and each current account will have different limits and offers in place. These will change every year, so it’s important to check the most up-to-date offers before signing up.


What’s the criteria?

Most first year students won’t have any trouble getting a student bank account. They are available to those who meet the following criteria:

  • You're aged 18 years or over (17 years or over for some banks)
  • You've been accepted onto a full-time UCAS course at a UK institution for at least 2 years
  • You don't already have a student account with another Banking Institution


How to budget

A student bank account can help your money go further, but a proper budget is the best way to make the most of your student loan. Check out our guide on budgeting throughout uni for tips.


Things to consider

  • Try to think long-term. Do you really need the largest overdraft on offer, or will a smaller one do the job? Will a railcard save you more than cashback in the long run? Try not to get carried away with up-front offers at the expense of long-term deals.
  • You can only choose one. Even though it’s okay to have multiple current accounts, you’re only eligible for one student account while you study, so choose wisely. You can switch accounts between banks throughout your studies if needed, but you might not be eligible for some of the benefits that come with your first opening. 
  • Review your limits. Some banks offer an arranged overdraft of up to £3,000, but that doesn’t mean you need to accept an overdraft that large. If you tend to get carried away with spending, it might be better to opt for a smaller overdraft to start with so you can better budget your money. You can always increase and decrease your overdraft throughout your studies, if needed.
  • Consider what happens after you graduate. When you graduate, your student account will usually convert to a graduate account (depending on your bank). Most banks will allow you to keep your 0% overdraft for a year after graduation, and then reduce your overdraft in increments. If you’re planning on using your overdraft, consider how you plan to pay it back after graduating, so you aren’t left struggling.
  • Is your overdraft ‘up to’ or guaranteed? Most overdraft limits vary from person to person, depending on your situation and credit score. Overdrafts also change based on the length of your studies. Be sure to double check how much your overdraft limit is, and if it varies from year to year.


Everything you need to know about overdrafts

An arranged overdraft is an agreed borrowing limit with your bank. Essentially, you’re allowed to borrow a certain amount of money while the limit is active.

Student accounts usually offer 0% interest arranged overdrafts, which means you borrow the money for free. You won’t need to pay back additional fees when using your overdraft. If you go overdrawn (borrow more than your limit allows) you’ll incur fees. These limits usually decrease in increments after you graduate, which makes it easier to pay back.

You can decrease or close your overdraft at any time as long as you’re not overdrawn. So, if you want to stay in control of your spending and you can afford to close your overdraft, that option is usually available. Additionally, some banks will allow you to increase your overdraft, but this is at their discretion.


About your credit score

When you apply for a student bank account, your credit score will be checked for eligibility. You might want to factor this in before filling in an application.

Usually a credit check won’t impact you that much, especially if you’re early on in your studies. If your credit score is reasonable (which is usually the case with new students) you’ll have no issues opening your account.

Having an arranged overdraft can actually be good for your credit score, as long as you play by the rules. If you pay off your overdraft when the time comes and don’t go overdrawn, it’ll reflect well on your credit score.

Why is a good credit score important? According to Experian, a higher credit score means companies will see you as a low risk borrower. So, when you apply for credit cards, a loan or even a mortgage, you’re more likely to get accepted. You can check your credit score and read more about how they work with Experian here.


How to switch bank accounts

It’s not necessary to switch your current account into a student account, but it can be beneficial if you want to keep your money all in one place.

You might want to open a student account while keeping your existing bank accounts. This might make it easier to budget your money for bills, rent and day-to-day spending.

If you’re opening an account with a new bank and you don’t want to keep your current account, you can switch your bank account. Switching is super easy and doesn’t require much input from you. You’ll just need to complete a few forms when applying for your new account, and your bank account will be switched within seven days. It’s that easy!


So, what are the best student bank accounts in 2020?

We've collected all of the student bank accounts on offer this year, so you can make a decision based on what your individual needs are.

Santander

Bank: Santander

Account Name: Santander 1|2|3 Student Current Account

Interest Free Overdraft: £1,500 in years 1-3, £1,800 in your fourth year and £2,000 in your fifth year.

Perks: A free 4-year Santander 16-25 Railcard to save 1/3 on rail travel in Great Britain. 1% AER interest up to £2,000. Up to 15% cashback with your Santander debit card at a range of major retailers.

NatWest

Bank: NatWest

Account Name: NatWest Student Bank Account

Interest Free Overdraft: £500 in your first term which can increase up to £2,000.

Perks: Choose from 1 of 3 student offers; Amazon Prime Student membership, a National Express Coachcard or a tastecard+.

Nationwide

Bank: Nationwide

Account Name: Nationwide FlexStudent

Interest Free Overdraft: £1,000 in your first year, £2,000 in your second year and £3,000 in your third year.

Perks: 1% AER interest up to £1,000.

Barclays

Bank: Barclays

Account Name: Student Additions Account

Interest Free Overdraft: £500 when opening your account which can increase up to £3,000 in your third year.

Perks: Earn cashback from participating online and high-street stores.

Lloyds Bank

Bank: Lloyds Bank

Account Name: Lloyds Student Account

Interest Free Overdraft: £500 when opening account which can increase to £1,000 in months 7-9 from account opening. This can increase to £1,500 in years 2 and 3 and £2,000 in years 4 to 6.

Perks: Up to 15% cashback with Lloyds Everyday Offers scheme, which allows you to get cashback at places you regularly shop.

Royal Bank of Scotland

Bank: Royal Bank of Scotland

Account Name: RBS Student Account

Interest Free Overdraft: £500 in your first term which can increase up to £2,000.

Perks: Choose from 1 of 3 student offers; Amazon Prime Student membership, a National Express Coachcard or a tastecard+.

Halifax

Bank: Halifax

Account Name: Halifax Student Current Account

Interest Free Overdraft: Up to £1,500.

Perks: Up to 15% cashback with Halifax Cashback Extras scheme, which allows you to get cashback at places you regularly shop. 0.10% AER variable interest.

TSB

Bank: TSB

Account Name: TSB Student Bank Account

Interest Free Overdraft: £500 upon opening which can increase up to £1,500.

Perks: 5% AER interest on balances up to £500.

HSBC

Bank: HSBC

Account Name: HSBC Student Bank Account

Interest Free Overdraft: £1,000 in your first year, £2,000 in your second year and £3,000 in your third year.

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