Banks love students.
Right now you’re probably borrowing money for university – that’s fine. Banks are hoping your university education gets you a good job and encourages you to use more of their products. They’re looking for loyal long-term customers, and they’re more likely to keep you for life if they catch you in university.
For this reason, banks offer quite a few rewards and benefits if you sign up with them as a student and open a student bank account. These can range from a sweet overdraft, to free railcards and even a bit of Amazon Prime!
But how to pick to the best student bank account for you? There are quite a lot of options to pick from and you don’t want to have to keep changing account.
So here are a few things you should look for to get the best student bank account:
A nice 0% overdraft
An overdraft means being able to borrow money directly from your current student account. This can be anywhere from £500 to £3,000. You borrow the money and then pay it back most likely after you graduate, at no interest whatsoever!
This can be extremely helpful for students who are struggling to make payments on time because of the timing of student loan deposits.
Classic example: rent is due before your student loan kicks in
Solution: use your overdraft, pay for rent, then repay the overdraft once the student loan arrives.
So an overdraft can be extremely helpful. Here are the banks that offer the best overdrafts:
Note: ‘Up to’ means that’s the maximum you’ll get. Depending on your credit score you may be allowed less.
For a more detailed guide check out Money.co.uk
‘Wow!’ you say. ‘I’ll just go for the one with the biggest overdraft then’
Not recommended – an overdraft is important, but let’s take a look at what else you can get…
Some sweet offers
Banks love students so much that they offer some pretty cool freebies to get them in the door. And really, some of them can be pretty sweet. Here are some examples:
- a free 16-25 railcard, great for those who take the train pretty often
- Up to 3% interest rate (more on this below)
- Up to 1% interest rate
- £80 Amazon gift card
- 1 year free of Amazon Prime
- Choose between 1 of 3: Amazon Prime Student Membership, National Express Coachcard, or tastecard
For more details on those 4 check out Money Supermarket.
An offer such as Amazon Prime can go a long way – but remember that any student can get a 6 month free trial on Amazon anyway.
So now you tell me: ‘great, I’ll take the bank with the largest overdraft and coolest deals. So far that looks like HSBC’.
HSBC is a huge international bank, so no wonder they offer such cool benefits. But before heading to the first HSBC in sight, let’s look at some other things you also need to take into account.
You want this bank to be convenient for you. This means it should have:
- A local branch near you (who can be asked to walk 30 min every time something goes wrong?)
- A simple and well working app and website – we want something up to date
- Good customer service
I’m telling you, good customer service is very important, because if you’re planning on staying with this bank for several years, you’re going to be phoning them up quite a bit.
The easiest way to find this out is to read customer reviews, articles and see what others think.
According to a survey with Which?, students put a score of 75% on Santander and 72% on Nationwide, with people raving about the amazing customer service with Nationwide. The worst scores are for TSB with 55% and RBS (my bank lol) has a score of 54%. HSBC had the lowest rating for its online and mobile banking.
So as you can see, it makes things a little more complicated if you want a good service. I suggest picking a few banks you’re interested in (e.g. Santander, Nationwide and HSBC) and going through their websites and customer surveys. That should give you a good idea of what you’ll get once you sign up with them.
Beyond the student account
Although the freebies and overdraft are pretty amazing for a student, it’s also important to look at what will happen after you graduate. Although it’s not too hard to switch account after you graduate, it’s also pretty nice to stick with the one you’re happy with and use their future benefits.
Once you graduate, your bank will automatically change your student account into a graduate one. Most won’t have that nice 0% overdraft anymore, but some might… Santander 123 Graduate account offers a sweet 0% overdraft of £2,000 for up to 3 years after you graduate and Barclays offers up to £3,000 one year after you graduate. Not bad.
For more graduate bank details check out Student Money Saver.
Another important thing to check are the interest rates. Most banks give a depressing 0.1% or less interest rate on the money sitting in your bank account – this means you’re literally losing money every year thanks to our good friend inflation. Your best bet: a high interest savings account. That’s why Santander’s 3% on a student bank account is pretty great.
Look for banks with high interest savings accounts. An example of this is Nationwide: They offer an amazing 5% on your first £2,500 for one year. Another is TSB, with 5% on your first £1,500. More details on Money.co.uk.
Those high interest accounts can be of great help once you graduate, so keep them in mind.
Finally, remember that you can always switch accounts and you can open several current accounts in different banks (but not student accounts!). This might be a bit of a hassle and you could end up like me with 5 different bank accounts in 4 different banks. But the benefits over time can make it worth it. So here’s a tip: put your emergency fund into a high interest savings account (could be a separate bank) and keep your graduate account for the overdraft. Thank me later 😉
Which bank are you thinking of signing up to?