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Parents: what to look for in student bank accounts

Parents: what to look for in student bank accounts

Category: Students

Updated: 12/07/2017
First Published: 12/08/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

On Thursday 18 August, A level results will be revealed, and school leavers will be excitedly preparing to go off to university.

University is a big lifestyle shock. As well as the realisation that washing doesn't do itself, it's probably the first time that your son or daughter will have full control over their own finances. Serving to make this transition harder is that your child may receive lump sums in the form of their student loan as well as having to learn how to budget and to pay bills.

A student bank account is of huge importance in helping your child manage cash flow, and even just surviving from one semester to the next.

Don't be fooled by account incentives

As a rule of thumb, don't be fooled by incentives. While free cinema tickets or discounted CDs may sound great, it's not how you should select your bank account.

Remember that, once equipped with a NUS card, your child will already have access to numerous student discounts and freebies.

Get the best student account for you

So once you have steered away from the incentives, what should you be looking for in a student account? Of course, the answer to this will vary from person to person.

A handful of lucky students will be interested in the credit rate of interest, but for most it will be the overdraft facility which is the determining factor.

Halifax offers by far the highest initial overdraft facility, with up to £3,000 available from year one, compared with many others which tier upwards, offering £1K in year one, increasing year-on-year until the third, fourth of fifth years of study.

A specialist student advice service can also be invaluable, and with a branch close at hand – maybe even on campus – it's that much easier to manage your money and speak with your bank. Student Bank Account Table
Provider Account Interest Free Overdraft Incentives
Barclays Bank Student Additions

Year 1 – up to £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

Specialist advice service, special deals with Phones4u: cashback on mobile phones/ contracts and discounts on accessories until 30.6.12
Clydesdale Bank Student Account None
The Co-operative Bank Student

Year 1 - £1,400
Year 2 - £1,700
Year 3 - £2,000

HSBC Student Bank Account

Year 1 onwards - up to £3,000, £500 formal overdraft limit agreed at account opening

Discounts on lonely planet travel guides and travel insurance
Halifax Student

Year 1 – up to £3,000
Year 2 – up to £3,000
Year 3 – up to £3,000
Year 4 – up to £3,000
Year 5 – up to £3,000

Discounts on AA Breakdown and Cardcare Cover. Commission free foreign currency and traveller's cheques
Lloyds TSB Student

Year 1 - £1,500
Year 2 - £1,500
Year 3 - £1,500
Year 4 - £2,000
Year 5 - £2,000
Year 6 - £2,000

Discounts at selected stores, specialist advice service, free YHA membership for three years, plus free music downloads
NatWest Student

Year 1 – up to £1,000
Year 2 – up to £1,250
Year 3 – up to £1,500
Year 4 – up to £1,750
Year 5 – up to £2,000

Student discount card on shopping and emergency cash
Royal Bank of Scotland Student Royalties

Year 1 – up to £1,000
Year 2 – up to £1,250
Year 3 – up to £1,500
Year 4 – up to £1,750
Year 5 – up to £2,000

Student discount card on shopping, discounts on laptops and emergency cash
Santander Student Current Account

Year 1 - £1,000
Year 2 - £1,250
Year 3 - £1,500
Year 4 - £1,800
Year 5 - £2,000

Mobile phone, gadget, laptop insurance when £500 funded each term
Smile Student Account

Year 1 - £1,000
Year 2 - £1,400
Year 3 - £1,800
Year 4 - £2,000

Yorkshire Bank Student Account None

Source: 12.8.11

Don't forget student insurance!

Specialist insurance is available for those students living in halls of residence or shared accommodation to protect posessions.

  • Make sure the level of cover is sufficient to protect the value of any electrical equipment (laptops, iPods, iPads, etc.) that is likely to accompany your child on their academic undertaking.
  • Think also about whether they'll need cover for other items such as bikes which might be needed to commute to and from campus.

And finally… make sure your child is prepared for Fresher's Week

The first big test of your child's money management and budgeting skills will be Fresher's Week. After all, a massive wedge of money sitting in their newly-opened student bank account and a week full of parties is potentially a recipe for disaster!

There will be a clamour for your child's money. Societies they wish to join will have fees to pay; special nights in the Student Union bar may require tickets – not to mention drink tokens! That's before the initial outlay that your child will face buying the books for their study.

After Fresher's Week, your child will still have the rest of the semester to get through, so being prudent will ensure that the money will stretch. Remember – being prudent doesn't mean they can't have fun!

The answer is to set a special Fresher's Week budget – if possible to be paid for from any summer earnings your child has made, rather than by starting to spend that student loan in earnest!

Accept that this budget will be a bit higher- this will be the prime time for your child to make new friends after all, and establish themselves in their new surroundings.

Disclaimer: 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.