What do I need to know about student bank accounts?

What do I need to know about student bank accounts?

The need to manage your finances ramps up the minute you decide to become a student. With that in mind, we’ve compiled a guide so you’ll be well placed to choose the current account that’s right for you.

Kelly Whybrow Content Writer
3
minute read
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When should I get a student account?

Many people apply for a bank account as soon as they receive their firm offer from UCAS. You might need your account for practical things, such as paying your rent, utility bills and student insurance. Having the account already set up and ready to go could make life a little bit easier for you.

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What benefits can I get from a student bank account?

Many student accounts will allow interest-free overdrafts up to an authorised overdraft limit of £3,000 during the course of your studies. Assuming you stay within your authorised limit, you won’t have to pay any interest on that overdrawn balance until after you graduate.

You should always aim to budget so that, whenever possible, you keep your balance in the positive. However, having a student overdraft will allow you to borrow more money than you have in your account at no charge (should you need to) – up to an agreed amount. This figure will be your authorised overdraft limit.

Often you’ll be offered freebies, such as railcards or Amazon vouchers. While you should never make your decision based on these deals alone, they’re sometimes combined with decent overdraft limits too and so can be a good option.

 

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What do I need to watch out for when looking at overdrafts?

It’s really important that you check the terms on any prospective overdraft so that you’re aware of what you’re getting yourself into with any new deal. Check if the overdraft is ‘guaranteed’ or ‘up to’ – the latter means you’ll probably only get the advertised overdraft if you have a good credit record.

Having a decent-sized, interest-free overdraft doesn’t mean you have to use it – you’re going to have to pay it back once your studies are complete. And if you go beyond your authorised overdraft limit, you could face the prospect of hefty fines and a poor start to your credit history.  

Your bank could also cancel your overdraft and make you pay back all of the outstanding amount.

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What else should I know?

As with many other applications for credit, a bank will usually check your credit history before approving or rejecting your application. You should be aware that submitting multiple applications could have an adverse effect on your credit score, so look around before you commit and just apply for the bank account that you think is right for you. It might also be a good idea to check your credit score before you apply, to make sure everything is in order. 

Comparing student bank accounts

We’ve put together a very simple comparison service that will show you what student bank accounts are available, including overdraft facilities and details of other features.