Choosing the Best Student Account

(Last updated 2010/2011)

It is important to also check with the bank you are going to chose what they think a student is! All the banks have their own definition, but if you go to University and are doing a Bachelor degree or a 5 year Medicine, Veterinary or Architecture course you will be fine as well.

Bank Unauthorised Overdraft (EAR) Formal Overdraft Limit
Year 1 Year 2 Year 3 Year 4 Year 5
NatWest 17.81% £1000 £1250 £1500 £1750 £2000
HSBC 3% above their Base Rate. £1000 £1250 £1500 £1750 £2000
Barclays*** 8.9% £1000 £1250 £1500 £1750 £2000
Santander £5 per day, capped at 10 days per month. £1000 £1250 £1500 £1800 £2000
Royal Bank of Scotland 17.81% £2750 £2750 £2750 £2750 £2750
Lloyds TSB* 8.2% £1500 £1500 £1500 £2000 £2000
Co-operative Bank 15.9% £1400 £1700 £2000 £2000 £2000
Halifax 24.2% £3000 £3000 £3000 £3000 £3000

*Lloyds TSB also offer an Islamic Students account at the same rates

*** At the time of writing Barclays have not fully decided on their student account deals, this is last years data. We will update this page once they have updated theirs!

It is strongly recommended you do not go above the overdraft limits of your account! Despite the numbers in the table above, many banks have stepped overdrafts which prevent you taking that sum at one time, usually its around £500 in the first six months and the remaining later in the year. Student accounts are not good for savers, if you are a saver consider an actual Savings Account as well as a student account.

Lloyds TSB student account offers a “Save the Pennies” type of scheme putting all the “change” you have left after a transaction into a savings account for you.

While high overdraft looks great, check out the charges if you do go into the unauthorised territory. They can be steep and they can be painful. HSBC do have a fair charging policy, and Lloyds TSB will forgive you charge wise the first time you go overboard! While RBS looks like a great overdraft it does have a very high EAR if you go over.

Freebies Table (Don’t use this to judge who to go for though!)

Bank Notable Freebies
  • £100 ASUS Voucher
  • Student Discount Card
  • 2 Years Worldwide Travel Insurance
  • Free TalkMobile Sim with £5 preloaded credit and free calls to HSBC phone banking.
  • Mobile phone, gadget and laptop insurance.
Royal Bank of Scotland
  • £100 ASUS Voucher
  • Student Discount Card
Lloyds TSB
  • 3 Years YHA Membership
  • 40 free eMusic downloads
  • £10 overdraft buffer.
  • Keep your overdraft for up to the full length of your course plus a year after graduation.
  • Commission Free Foreign Currency
  • 25% discount on AA breakdown cover.
  • 20% on Halifax card card protection insurance.
Co-op Bank

Don’t go for a bank because it offers lots of freebies, most are fairly gimicky and are only there to entice you to join.

My Recommendations

I would recommend choosing the bank that is in your banks union for convenience sake if they have one! This will make paying in the cheques much easier. If you are going to be relying on an overdraft to pay for your time at university, then larger is obviously better, beware of the interest rates for going passed your agreed limit though, and make sure you read the small print, sometimes banks can ask for their money bank! An account that lets you pay back a year after you graduate would probably also be more beneficial if you are paying your entire way by overdraft!

If you have savings get an online savings account or save on the high street you will get a much better rate of interest than in a current or student account.

Bank Websites can be confusing, reading through all the bank websites to get this information took quite some time, if you think I’ve made a mistake please get in touch.

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