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Student bank accounts

Student bank accounts
What to consider when choosing a student bank account

Choosing a student bank account probably isn’t going to be the most exciting task you’ll need to do before coming to University, but it is definitely one of the most important ones.

After all, you need easy access to your money! It may seem slightly overwhelming at first because banks have a lot of appealing offers and incentives for students. We can’t recommend accounts to you, but we can remind you of 8 factors to consider when choosing your account.

Do you need an overdraft?

Overdrafts can be a welcome safety net between your loan or bursary instalments, and are usually a much cheaper option that borrowing on a credit card or store card, or taking out a payday loan. Although you are borrowing money from the bank, you may not be charged any interest on an authorised overdraft until after you have finished your course. You might not need an overdraft while at University, but it is always better to have access to one, just in case.

Be realistic when you consider freebies

Do you really need a £60 Amazon voucher instead of a longer 0% overdraft period? Do you need to go for an account with a student railcard if you’ll be taking coaches to travel home during University holidays? Remember that it’s only a great offer if you’re going to use it.
Prioritise overdrafts over freebies where possible, including the largest potential amount and the longest guaranteed 0% interest overdraft.

Have you made a budget, and does your overdraft compliment this?

Create a budget – look at how much you are being paid and when, as well as how much and when your essential bills like rent need to be paid – including any potential financial emergencies just to be on the safe side, as this can help you in calculating how much overdraft you’ll need.

Be realistic with yourself, do you really need a large overdraft?

Try not to fall into the trap of applying for the maximum overdraft immediately just because it is being offered to you. You might only need to use the overdraft as a buffer between funding instalments and so starting with a large overdraft might not be the best option, especially as it might just tempt you to spend more money you don’t have on things you don’t need.

Always read the ‘small print’

It is always worth reading the ‘small print’ for your account as many accounts will offer ‘up to’ a certain amount so it is worth making sure you’re aware of the exact amount that you can apply for. Overdraft amounts might not be guaranteed. Also, don’t forget to check how much you may be charged for unauthorised spending, as well as when the 0% interest period finishes (usually this will be after your course has finished) so that you don’t have any unpleasant surprises.

Try not to get carried away with your overdraft

It is important to remember that an overdraft is not ‘free’ money (if only!) and bear in mind that you will need to pay this money back, normally when you have finished your course. It may be useful to include paying off your overdraft in your budget, as in reality, any money paid into your account such as your next loan instalment may be ‘swallowed up’ by repaying your overdraft first. Including this in your budget will make it easier to manage your money and ensure that you do not exceed your maximum overdraft allowance, should any emergencies arise.

Know your limits!

Never go over your overdraft limit as you will incur large charges and this might create a vicious financial cycle that is hard to escape from. If you sense that you might exceed your overdraft amount then you should contact your bank in advance to see whether you can increase this before you exceed your limit.

Do you want more than one account?

If you are super organised, you might want to have two bank accounts – you can use one for rent, utility bills and other essential regular spending, and the other for socialising, presents or even saving money! However, be wary of second overdrafts, and be aware that many banks will not offer a second student account (or overdraft) to those who already have one, so it may be worth looking into savings accounts with good interest rates as your second account option.

Useful information and links

Find out more about making your own budget.

Useful websites

Money Saving Expert – Student bank accounts 
Save the Student – Student bank accounts