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Despite the current uncertain climate, next month universities are set to reopen and welcome a new influx of freshers. For many students due to start their degree next month, getting a student bank account will be one of the most important financial decisions they make in preparation for their university life.
Although students can choose to get a traditional bank account, student bank accounts tend to offer incentives specifically designed to make university life easier. For example, many student banks accounts will offer interest-free overdrafts that can provide a much-needed lifeline if unexpected costs arise. As well as this, some student accounts will offer benefits, such as cashback, for students.
“Students searching for a bank account would be wise to weigh up any perks that may be on offer with the interest-free overdraft that the account carries,” explained Rachel Springall, finance expert at Moneyfacts.co.uk. “During the years of study, a generous interest-free limit would provide students with a financial safety net and Halifax and Santander offer up to £1,500 from the outset of year one, which is generous. It is worth noting that overdrafts are not guaranteed, and they will need to be paid back once a consumer ends their studies.
“Those looking to save on travel will find Santander is offering a free Railcard and those who pick NatWest can opt for a Coachcard, or alternatively students can opt for a tastecard, or get an upfront £10 Amazon gift card and one year of Amazon Prime Student instead. Those looking to save on everyday spending can find cashback offers of up to 15% on some accounts, but it does depend on where they spend.”
The best student bank account will depend on individual needs. For example, students who will be travelling a lot by train may choose Santander’s account for the free Railcard, while those who are planning to study overseas could decide that Nationwide Building Society’s FlexStudent – Funded is a good option as it does not have any foreign usage charges. When looking at student bank accounts, students should ensure that they know what, if any, fees are associated with the bank account as well as the interest rate on overdrafts.
While it is common for students to dip into their overdraft during their studies, students should keep in mind that overdrafts should only be considered a short-term form of borrowing and they should repay the money as soon as they are able. As well as this, once their degree has ended, student banks accounts will normally become standard bank accounts if there is no option to switch to a graduate account and, as such, student interest-free overdrafts will end and they will be charged the account’s standard overdraft APR.
Students should also keep in mind that any debt they accrue during their degree will have a negative impact on their credit score if they are unable to meet repayments – students can check their credit score using the UK Student Credit Checker.
Springall added: “Students would be wise to consider discussing their financial situation with family or friends if they feel anxious, but they can also contact their bank if they need support too either in branch, online or by phone. It is quick and easy to open an account and students will need to provide a copy of their acceptance letter to the bank or building society.”
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
