As results days are almost upon us, graduations abound and we edge towards a new academic year, prospective students and graduates might be starting to think about the most cost-effective bank account that will cover their day-to-day needs for the next chapter.
After all, choosing a good student bank account and finding out how to manage your finances will be an essential part of life, especially for those who will be living away from home for the first time, so getting it right is vital - and preparation is key!
We're here to help, with our latest analysis highlighting some of the most essential elements when it comes to choosing the right student account, together with a few top tips on how students can prepare themselves for the years ahead.
"There can be a fine line between choosing the perfect student account for someone's circumstances and accidentally picking a poor account if it's not thought through," said Rachel Springall, finance expert at moneyfactscompare.co.uk.
"As with any bank account, the best deal entirely depends on how someone uses the account. While students could be tempted by an account with perks, it may not end up being the most cost-effective choice over the next few years if they don't make use of them."
One of the most appealing features of a student account - and arguably the most beneficial for the years ahead - could be the interest-free overdraft. This can be a lifeline for those unable to earn an income that sufficiently covers their expenses, and means students needn't worry about overdraft fees in the midst of their studies.
Currently, Halifax and HSBC are the banks that offer the most generous interest-free overdraft facility of £3,000 upfront. "However, as with any bank account, it's worth noting that the advertised overdraft limits are not a guarantee as applicants will be credit checked, so having a good credit score is important," said Rachel. "There are also some accounts which spread the overdraft facility to students over the years of their study, which can be a much more sensible option for some."
Don't always assume that a bank with an on-campus branch will provide the best package for your needs, as this convenience could cost. "Instead, students would be wise to swot up on what's available to them and compare every incentive before they pick an account," said Rachel.
"Whilst living away from home and overseeing their own finances may seem daunting, it's worth remembering that most banks and building societies now offer 'on the go' banking. Mobile apps and online access can mean a branch on their doorstep might not be as essential as they may think."
Although some student account perks can be gimmicky, others are genuinely beneficial, and that definitely includes travel perks. After all, "it can be an expensive commute to visit family members during the holidays or to fit in a mini-break, so any savings to be made here will be highly attractive," said Rachel.
Currently, two of the most lucrative incentives for those looking to reduce the cost of travelling across the country would be a railcard, available from Santander's student offering, or a coach card from NatWest. The savings could soon add up.
It's important to remember that a sizeable overdraft will eventually need to be repaid, so while it can easily be a temptation, you'll want to try and use it sparingly. Either that, or get a part-time job!
If you can fit it in during your years of study, then getting a part-time job - perhaps around lectures, or purely during academic breaks - could be a great way to earn an income and reduce any overdraft you may owe. That student loan won't go too far, after all...
Once you graduate, your needs will change again, which is when it's time to switch to a graduate current account. However, you'd be wise to compare accounts and not assume that your current provider will offer the best possible option, as you'd never know what deals you could get elsewhere.
For example, "some of these accounts will offer interest on balances and cashback on spending, which will come in handy when graduates are earning a decent wage," said Rachel, "and it will certainly be refreshing once they get their account back in the black."
Ready to find the right account for your needs? Check out the tables below for a selection of the best student and graduate bank accounts to get you started.
Selection of Student Accounts
| Provider / Account Name |
Credit interest gross |
Interest free overdraft |
Authorised overdraft EAR |
Incentives |
|
Bank of Scotland
Student Account
|
0% |
Year 1 - up to £1,500
(0-6 months £500, 7-9 months £1,000 and 10 months+ £1,500)
Year 2 - up to £1,500
Year 3 - up to £1,500
Year 4 - up to £2,000
Year 5 - up to £2,000
Year 6 - up to £2,000
|
8.21%
Plus £6pm usage
|
Commission-free foreign currency and traveller's cheques.
Free to register for Everyday offers and sign up for It's On Us.
Earn up to 15% cashback from selected retailers when shopping with a Bank of Scotland debit and/or credit card. Customers must be registered for Online Banking.
|
|
Barclays Bank
Student Additions
|
0% |
Year 1 - up to £1,000
Year 2 - up to £2,000
Year 3 - up to £3,000
|
£15 fee-free buffer
Overdrawn costs:
£0.01 to £1,000 = Nil
£1,000.01 to £2,000 = £0.50p per day
£2,000.01 and over = £1 per day
|
Earn cashback through Barclays SmartSpend - a free service that's available to everyone who uses Online Banking.
Customers will earn more from SmartSpend when they join Barclays Blue Rewards - an extra 1% cashback on purchases. Blue Rewards is available as an add-on for £3pm = Loyalty reward of £7 per month paid.
Extra rewards available on taking insurance products.
|
|
Halifax
Student Account
|
0.10% |
Year 1 onwards - up to £3,000 |
7.20% |
Commission free traveller's cheques and currency.
Cashback Extras - Earn up to 15% cashback from selected retailers.
|
|
HSBC
Student Bank Account
|
1.74%
for first year
up to £1,000*
|
Year 1 onwards - up to £3,000 |
0% |
Access to Student Exclusives - offers and discounts.
Commission-free foreign currency.
*Interest no longer available from 1st August 2017.
|
|
Lloyds Bank
Student Account
|
0% |
Year 1 - up to £1,500
(0-6 months £500, 7-9 months £1,000 and 10 months+ £1,500)
Year 2 - up to £1,500
Year 3 - up to £1,500
Year 4 - up to £2,000
Year 5 - up to £2,000
Year 6 - up to £2,000
|
8.21%
Plus £6pm usage
|
Commission-free foreign currency and traveller's cheques.
Free to register for Everyday offers and sign up for It's On Us.
Earn up to 15% cashback from selected retailers when shopping with a Lloyds Bank debit and/or credit card. Customers must be registered for Online Banking.
|
|
Nationwide BS
Flex Student
|
1.00%
up to £1,000
|
Year 1 - up to £1,000
Year 2 - up to £2,000
Year 3+ - up to £3,000
|
Not available |
Simply Rewards - Earn cashback from selected retailers.
No charges for using debit card abroad.
A range of interactive educational support and tools.
|
|
NatWest
Student Account
|
0% |
Year 1 - up to £2,000
(1-4 months £500, 5-6 months £2,000)
Year 2 - up to £2,000
Year 3 - up to £2,000
Year 4 - up to £2,000
Year 5 - up to £2,000
|
Not available |
Free National Express Young Persons Coachcard. Valid for four years, with students saving up to one third on most coach travel in the UK.
Free 24/7 Emergency Cash Service.
|
|
Royal Bank of Scotland
Student Account
|
0% |
Year 1 - up to £2,000
(1-4 months £500, 5-6 months £2,000)
Year 2 - up to £2,000
Year 3 - up to £2,000
Year 4 - up to £2,000
Year 5 - up to £2,000
|
Not available |
Free National Express Young Persons Coachcard. Valid for four years, with students saving up to one third on most coach travel in the UK.
Free 24/7 Emergency Cash Service.
|
|
Santander
123 Postgrauate Account
|
1% at £100
1.98% at £200
2.96% at £300 up to £2,000
|
Year 1 - up to £1,500
Year 2 - up to £1,500
Year 3 - up to £1,500
Year 4 - up to £1,800
|
Not available |
Earn up to 15% cashback from selected retailers.
Free access to preferential rates, exclusive offers and discounts at 123 World.
|
|
Santander
123 Student Current Account
|
1% at £100
1.98% at £200
2.96% at £300 up to £2,000
|
Year 1 - up to £1,500
Year 2 - up to £1,500
Year 3 - up to £1,500
Year 4 - up to £1,800
|
Not available |
Earn up to 15% cashback from selected retailers.
Free access to preferential rates, exclusive offers and discounts at 123 World.
|
|
TSB
Student Account
|
4.89%
up to £500
|
Year 1 - up to £1,500
(0-6 months £500, 7-9 months £1,000 and 10 months+ £1,500)
Year 2 - up to £1,500
Year 3 - up to £1,500
Year 4 - up to £1,500
Year 5 - up to £1,500
|
£10 interest free and fee-free buffer
8.21%
|
|
| Source: Moneyfactscompare.co.uk |
Compiled 21/07/2017 |
| This table does not include every account on the market and is to be used as a guide only. E.g. It does not include accounts available in NI only. |
Selection of Graduate Accounts
| Provider / Account Name |
Credit interest gross |
Interest free overdraft |
Authorised overdraft EAR |
Incentives |
|
Bank of Scotland
Graduate Account (Existing Student Account customers only)
|
0% |
Year 1 - up to £2,000
Year 2 - up to £1,500
Year 3 - up to £1,000
|
19.89%
Plus £6pm usage
|
Commission-free foreign currency and traveller's cheques.
Free to register for Everyday offers and sign up for It's On Us.
Earn up to 15% cashback from selected retailers when shopping with a Bank of Scotland debit and/or credit card. Customers must be registered for Online Banking.
|
|
Barclays Bank
Higher Education Account
|
0% |
Year 1 - up to £3,000
Year 2 - up to £2,000
Year 3 - up to £1,000
|
Overdrawn costs:
£0.01 to £1,000 = Nil
£1,000.01 to £2,000 = £0.50p per day
£2,000.01 and over = £1 per day
|
Earn cashback through Barclays SmartSpend - a free service that's available to everyone who uses Online Banking.
Customers will earn more from SmartSpend when they join Barclays Blue Rewards - an extra 1% cashback on purchases. Blue Rewards is available as an add-on for £3pm = Loyalty reward of £7 per month paid.
Extra rewards available on taking insurance products.
|
|
HSBC
Graduate Bank Account
|
0%
|
Year 1 - up to £1,500
Year 2 - up to £1,000
|
19.90% |
Preferential savings rates, mortgage deals and commission free foreign currency.
|
|
Lloyds Bank
Graduate Account
(Existing Student Account customers only)
|
0% |
Year 1 - up to £2,000
Year 2 - up to £1,500
Year 3 - up to £1,000
|
19.89%
Plus £6pm usage
|
Commission-free foreign currency and traveller's cheques.
Free to register for Everyday offers and sign up for It's On Us.
Earn up to 15% cashback from selected retailers when shopping with a Lloyds Bank debit and/or credit card. Customers must be registered for Online Banking.
|
|
Nationwide BS
FlexGraduate
|
0%
|
Year 1 - up to £2,500
Year 2 - up to £1,750
Year 3 - up to £1,000
|
Not available |
Simply Rewards - Earn cashback from selected retailers.
No charges for using debit card abroad.
|
|
NatWest
Graduate
|
0% |
Year 1 - up to £2,000
Year 2 - up to £1,000
|
17.81% |
Free tastecard membership.
Free 24/7 Emergency Cash Service.
|
|
Royal Bank of Scotland
Graduate
|
0% |
Year 1 - up to £2,000
Year 2 - up to £1,000
|
9.90% |
Free tastecard membership.
Free 24/7 Emergency Cash Service.
|
|
Santander
123 Graduate Account
|
1% at £100
1.98% at £200
2.96% at £300 up to £2,000
|
Year 1 - up to £2,000
Year 2 - up to £2,000
|
nil
£12 fee-free buffer
|
Earn up to 15% cashback from selected retailers.
Free access to preferential rates, exclusive offers and discounts at 123 World.
|
|
TSB
Graduate Account
|
0%
|
Year 1 - up to £2,000
Year 2 - up to £1,500
Year 3 - up to £1,000
|
£10 interest free and fee-free buffer
16.77%
|
|
| Source: Moneyfactscompare.co.uk |
Compiled 21/07/2017 |
| This table does not include every account on the market and is to be used as a guide only. E.g. It does not include accounts available in NI only. |
