Opening A Student Bank Account | Student Banking

Choosing the right student bank account for your time at university can help you make the most of your money.

From linked overdrafts to credit cards, here’s what to look for.

What is a student bank account?

A student bank account is like a regular bank account that has been specifically designed for people in higher education.

Student bank accounts usually offer incentives like:

Vouchers
Railcards
Cash back
Cash rewards for opening the account

Incentives for opening an account may sway your initial thinking, but it pays to check what else you’ll get with the account to help you manage your money throughout your studies. For example, an interest-free arranged overdraft could give you an additional buffer.

Other things to consider include tools and features that may come with an account, for:

Making payments
Using cash machines (including any associated charges at home and/or outside the UK)
Keeping track of what you’ve spent and how much you have left

It’s also worth thinking about how accessible you want your bank to be. Do you want to be able to talk to someone face-to-face in a branch, on the phone or via chat, for example, as well as do your day-to-day banking online? Or are you happy with a purely digital relationship?

Can you have more than one student bank account?

You're normally allowed to have only one student bank account. It should be outlined in the terms and conditions of your account about opening multiple accounts. If you’re unsure, speak to your bank.

How does a student overdraft work?

An arranged overdraft is a way of borrowing money through your current account. Banks will often charge interest on what you’ve borrowed.

However, student bank accounts often provide overdrafts that don’t charge interest.

Limits for student overdrafts may change depending on what year of study you’re in.

Keep in mind, student overdrafts may be interest-free while you’re a student but you’ll need to pay the money back, with possible interest, once you graduate.

Some graduate accounts may allow you to continue with an interest-free overdraft amount for a set time.

Explore: What is a student overdraft?

Does a student overdraft affect your credit score?

A student overdraft won’t affect your credit score if you’re careful with it.

Going over your arranged overdraft limit regularly or continuously for 30 or more days can have a negative effect, so make sure you pay it back promptly.

Explore: How to improve your credit score as a student

Getting a credit card as student

Having a student credit card can enable you to spread costs – essentially buying something today and paying it off at a later date or in instalments. Used wisely, a credit card can help you build a healthy credit score and give you payment protection when you spend between £100 and £30,000 under Section 75 of the Consumer Credit Act.

You’ll have a credit limit – a set amount you’re allowed to spend on the card – and you’ll get a statement every month with a list of your transactions. If you repay the full amount within that agreed timeframe, you won’t have to pay interest on your purchases.

However, if you can't repay the full amount, you’ll be charged interest - and this can quickly add up. Before taking out a student credit card, it’s important to check what the interest rate is, as this will affect how much you need to repay. You could also be charged a fee if you go over your credit limit, use your student credit card outside the UK or make a late payment.

So, while credit cards can be a useful way to spread cost, cover emergencies and improve your credit rating if used in the right way, they’re not necessarily for everyone.