The Best Student Bank Accounts for 2016

The Best Student Bank Accounts for 2016

Key things to remember:

  • Get the biggest 0% interest overdraft you can get.
  • When it says ‘up to’ it means you might not get the full overdraft allowance, it will often depend on your credit rating.
  • Freebies are good but having a larger overdraft will often be much better.
  • Check & compare the extra/hidden charges that you may face. e.g. going over your overdraft amount may cost you as much as £150!
  • Consider a student bank account even if you don’t need the 0% overdraft, by placing this money in an ISA it would give you a tax-free income.
  • Remember you have to pay the overdraft back at the end of your course! Don’t splash it!
  • Banks actively target students because many of them will continue to use their student account as their main account in the future (when people generally become profitable for banks).
  • Double check you fully understand the terms of any that you sign up to, for instance technically all banks can request the money back at any point from you, although this very rarely happens.

Our top 4 picks:


Santander
Overdraft
Freebies

Up to £1,500 (£250 guaranteed + up to £1500 with £500 pay in (per term))

Everyone gets £250 overdraft, then up to £1,500 in year 1-3 (if you make £500 per term pay-in to the account), the majority of people will get £1200. £1,800/yr4 & £2,000/yr5

4-year 16-25 Railcard (worth about £90 + gives 1/3 off travel)

It says you must pay in £500 per term to get the freebie.

1-3% In-credit interest

3% AER / 2.96% gross (variable) interest on balance from £300 up to a maximum of £2,000. 1% on £100+. 2% on £200+. Paid monthly.

Fees (click to read more)

£5 daily charge (max 10 days per month) if you’re over your agreed overdraft. £5 for each transaction over your agreed overdraft that gets paid & £10 for those unpaid. Total £95 per monthly statement period.

Our opinion

A reasonable overdraft at up to £1,500 (years 1-3) and a very good freebie that if you plan to travel to uni via train will save you a fortune over the 3-4 years.

If you don’t plan on using the train often then consider HSBC, Halifax or Natwest.

The 3% credit interest on balances above £300 is a nice bonus but you might find you can improve this by placing the money into an ISA instead.

 


HSBC
Overdraft
Freebies

Up to £3000 (£500 guaranteed, most likely £1500-£2000)

Up to £3,000 overdraft & no overdraft fees. Subject to status and account conduct. Most likely you will be offered a £1500 interest free overdraft.

Free £60 Amazon voucher

First year students will receive a free £60 Amazon voucher (before 31/10/2016).

Interest

For first year students, the first £1,000 in your Student Bank Account, will earn interest at 1.5% above base rate.
Interest is calculated daily on the cleared credit balance and is paid monthly.

Fees (click to read more)

Fees aren’t obvious which annoys us but it appears to be that you can’t go beyond you agreed interest free overdraft aka no fees.

Our opinion

One of the best overdrafts available (once you actually get it), a great freebie that can be spent or sold on for profit + an OK interest rate combined to make one of the top 3 accounts of the year.

If you’re planning on travelling by train or coach the other two accounts probably are worth considering.

We believe the account won’t allow you to go above your agreed overdraft which is a great benefit for students, who generally are all new to budgeting and will often make mistakes.


Natwest
Overdraft
Freebies

Up to £2000 overdraft (£500 in 1st term, up to £2000 in 2nd)

This is ‘Up to’ so you’re not guaranteed it and will depend on a credit check.

The first year is tiered at £500 in your 1st term then up to £2,000 in your 2nd.

Be aware that you must deposit £750 every 6 months (eg. your maintenance loan) and make at least 3 monthly transactions to get any overdraft at all.

Free 4yr National Express coachcard (1/3 off travel)

Sign up to online banking and select to receive paperless statements to get this freebie.

Our opinion

Natwest have generally always had a strong offer for students, the coach travel discount won’t be for everyone but it’s very useful if you don’t mind the longer journey times and will actually use it.

The overdraft starts at £500 which is rather annoying but it goes up to £2000 in your second term which is one of the best you can get this year.

Fees (click to read more)

£6 for each payment over your overdraft (max £60 per period).


Nationwide
Overdraft
Freebies

Up to £3000 (£1K Yr1, £2K Yr 2 & £3K Yr3)

A decent sized overdraft, especially for the 3rd year.

You’ll need to pay in at least £1,500 per year of study* across two or more transactions. This can include your student loan, money from family members or any other income.

No freebies but competition to win £15K + 1% interest on balances

A decent sized overdraft, especially for the 3rd year.

Receive 1% AER/gross p.a. (variable) on balances up to £1,000.

Fee FREE!

The account is designed to prevent you from going over your agreed overdraft limit. However, in the unlikely event that you do go over your agreed limit, they still won’t charge you.

You’ll simply need to bring the balance back within your agreed limit before you can carry on using your account. If you don’t bring it back, you’ll be unable to take cash out, and will be unable to use your card to purchase items (both in store, online and via the telephone).

Our opinion

Nationwide are new to the student market, the overdraft is good to begin with but becomes one of the best at the end of year 3.

The lack of freebies is a shame but the fact the account stops you from being charged any fees is a great bonus and if you’re not good with budgeting this could be ideal for you!


The rest:

With limited freebies or poor overdrafts the following aren’t the best student accounts (in our opinion):


Co-op
Overdraft
Freebies

Up to £2000 overdraft (£1400 first year)

This is ‘Up to’ so you’re not guaranteed it and will depend on a credit check.

£300 must be deposited straight away.

£1,400 interest free overdraft in your 1st year.
Up to £1,700 interest free overdraft in your 2nd year.
Up to £2,000 interest free overdraft in your 3rd year.

You will need to request an increase to your overdraft limit for years 2 & 3. Your overdraft limit will not automatically increase in your 2nd, 3rd, or subsequent years of study. Approval will depend on an assessment of account conduct.

No freebies

Fees (click to read more)

Formal overdraft service above the account standard overdraft facility for the current year of study. 0.79% per month; 9.9% EAR.

Informal overdraft service above the account standard overdraft facility for the current year of study (1.46% per month; 18.9% EAR.

£10 daily fee for being over your agreed overdraft + £10 monthly fee.

EAR is the Equivalent Annual Rate for overdrawn balances

Halifax
Overdraft
Freebies

Rumoured to be up to £3000 overdraft (actually more like £1200)

This is ‘Up to’ so you’re not guaranteed it and will depend on a credit check but more worryingly all mentions of the overdraft online don’t mention the £3000 at all, there is a possibility they’ve removed it. In the past £1200 is about what they offer a traditional first year student.

No freebies but 0.10%AER interest on credit balances

Earn credit interest on any credit balance 0.10%AER (0.10% gross) variable. Interest is paid monthly.

Fees (click to read more)

Over agreed %
Planned: 0.58% a month (7.2% EAR)
Unplanned: 1.82% a month (24.2% EAR)

£10 fee for each purchase that isn’t paid as you’re over your limit.

£28 monthly fee if at any point you go over your agreed overdraft.

“If we have a valid reason, we can choose not to charge a fee that you would otherwise have to pay.”


TSB
Overdraft
Freebies

Up to £1500 overdraft (starts at £500 for 6 months)

This is ‘Up to’ so you’re not guaranteed it and will depend on a credit check.

Starting with £500 for the first six months. You can then apply to increase it to £1,000 in months seven to nine and from month ten up to £1,500 – helping you to manage your spending over your first year.

No freebies but 5% interest on balances up to £500

Receive 5% AER /4.89% gross variable interest on balances up to £500, paid on the second working day of each month

Fees (click to read more)

Free £10 overdraft buffer. Over £1,500+ 0.66% (8.21% EAR)


RBS
Overdraft
Freebies

Up to £2000 overdraft

This is ‘Up to’ so you’re not guaranteed it and will depend on a credit check.

4yr National Express coachcard

Fees (click to read more)

£6 for each payment over your overdraft (max £60 per period).


Barclays
Overdraft
Freebies

£500 overdraft (up to £3000 over course length)

Apply for a £500 overdraft when you open your account, which you can increase up to £3,000 over the course of your studies (subject to status).

Account opening: up to £500
Term 1: up to £500
Term 2: up to £1,000
Term 3: up to £1,500
Term 4: up to £2,000
Term 5: up to £2,500
Term 6 and beyond: up to £3,000

Fees

£1 a day when you go over your agreed overdraft, no maximum!

No freebies


Lloyds Bank
Overdraft
Freebies

Up to £1500 but actually starting at £500 (up to £2000 in years 3 & 4)

In your first year, you can apply for a Planned Overdraft where there is an interest and fee-free amount of up to:

£500 for the first 6 months,
£1,000 from month 7,
£1,500 from month 10,

Free 3-year NUS card (student discount card) worth £32

Not the best freebie in the world as alternative cards/apps are available but worth £32 and gives 5% off Amazon and free McDonalds among other things.

Fees (click to read more)

Unplanned Overdraft balance of £10 or less: no fee (buffer applies)
Unplanned Overdraft balance is more than £10 but less than £25: £5 fee per day
Unplanned Overdraft balance is £25 or more: £10 fee per day

A returned item fee £10 for each item (for all purchases declined above £10)

The information on this page was correct at time of posting (August 22nd 2016). All amounts are subject to change, ensure you read the terms and conditions before agreeing to anything.

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Important things to remember with everything we post:

  • If you earn over your personal allowance (currently £12,500 a year) HMRC need to get their % cut (even if the money is in cash or from another country)
  • If you’re working for yourself / earning an income on the side you need to let HMRC know – There are numerous benefits but also some drawbacks
  • You need to always ensure whatever you’re doing is legal and not hurting anyone else – be careful and always think twice
  • Some income streams may require you to have DBS check, licence, insurance or qualifications before you can start to profit from it, do your research.
  • Be careful that any additional income doesn’t compromise your studies or main income/job
  • If you work for a company check your contract, if you don’t inform them you’re working on other side projects outside of work they may have grounds to ownership on this work

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