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Student overdrafts explained

Whether you’re stocking up your fridge or getting uni supplies, a student overdraft could help if you’re low on funds.

Before you start spending, it’s important to get to grips with everything your student overdraft entails. 

How does a student overdraft work?

An overdraft is where you can spend more than what’s in your current account. This will be up to a set amount, and you may be charged interest for using it. Student overdrafts work in the same way but are usually interest-free.

If you’re unsure, it’s worth checking if you’ll be charged interest on using your student overdraft with your bank.

Explore: Student banking: what do you need to know?

How much can you borrow on your student overdraft?

The amount you’ll be able to borrow will depend on who you bank with and your financial circumstances. Some banks may let you have up to £3,000 on your student overdraft, while others may set a lower limit.1

There may also be limits depending on what year of study you’re in. For example, some banks may let you have a £1,000 student overdraft in your first year, which can be extended to £2,000 in your second year and £3,000 in your third year. This can vary between banks, so you’ll need to check this when applying for a student bank account. 

Again, if you’re unsure about your student overdraft limit, contact your bank. 

How to get a student overdraft

To get a student overdraft, you’ll need to apply for a student current account. You’ll usually need to show your proof of acceptance onto a qualifying course, as well as your ID and proof of your address. Some banks may also have other criteria to be able to apply, so it’s worth checking with them first.

Some student bank accounts come with other introductory offers which you can make the most of when opening an account. However, while introductory offers can be great, it’s important to make sure the account is going to be right for you over the long term.

Tips for using your student overdraft:

  • keep track of your spending through online or mobile banking
  • don’t go over your arranged overdraft limit
  • stay up-to-date with any changes to your current account or overdraft, including fees
  • remember that anything you spend from your overdraft will need to be paid back

How many student overdrafts can you have?

Generally, you can just have one student overdraft. Some banks may also have it in their terms and conditions that you can only have one student bank account.

Having multiple student overdrafts may be difficult to manage. It may also increase your chances of getting into debt if you’re unable to pay them back. 

Can you increase your student overdraft?

You may be able to extend your student overdraft limit after a certain period of time. This will depend on your bank, and they may take into consideration the way you’ve used the account. 

Should you increase your student overdraft?

The important thing to remember when it comes to your student overdraft is that you’ll need to pay back anything you borrow. If you need the extra funds and you’re comfortable you can repay, then increasing your overdraft may be helpful.

Keep in mind, when you’re no longer a student you may incur interest if you still owe money on your overdraft. Also, extending your overdraft limit if you don’t need it may just increase the temptation to spend.

Explore: Borrowing money as a student

How do you know if you're nearing the limit of your overdraft?

To make sure you’re not overspending on your student overdraft, you’ll need to be aware of your incomings and outgoings. You can use online or mobile banking to regularly review your account and check how much you’re spending. 

There are apps, which can help you monitor your money. You could check if your bank offers text alerts that send you a message if your balance drops below a certain amount.

What should you do if your degree is longer than 3 years?

Make sure your bank knows when you’re graduating. This is especially important if you’ve extended your time studying through a change of course or by repeating a year. If you don’t, your student account may be changed to a graduate account, and you may be charged interest on your overdraft. 

When do you pay back your student overdraft?

If your degree is coming to an end, you’ll need to look at paying back your student overdraft. You may be given a certain amount of time to pay this back by your bank, before being charged any overdraft interest. Make sure to check your student overdraft documentation or speak to your bank.

You may also want to consider switching to a graduate account. Your bank may automatically change your student bank account to a graduate account, but you should check this as it’s not always the case. 

Some graduate accounts charge 0% interest on overdrafts for a fixed period of time, giving you the opportunity to pay back your overdraft. Again, you’ll need to check this before switching. 

If you want to close your student account, you’ll need to have paid back your student overdraft before you’re able to.

Explore: How to repay debt

How to pay off your student overdraft

Whether you’re wanting to pay your overdraft back while you’re studying or when you’ve left uni, there are some things you can do, such as:

  • create a repayment plan for yourself
  • reduce your overdraft limit (if you can afford to)

If you’re finding your student overdraft unmanageable and are struggling to get out of it, there are ways you can get help. You could speak to a trusted family member or friend, your bank or seek professional advice.

Debt organisations may also be able to help, such as:

What next?

If you can, you may want to build up some money in a savings account before you head off to uni. This can help you stay out of the red.

Once you’re there, creating a budget and planning your expenses can help you stay on top of your cash flow. Use our budget planning tool to help you see where you’re spending your money and where you could potentially make changes.

1Save the student: Student overdrafts


This article provides general information and does not take into account the financial situation of the reader. For this reason it must not be relied on as financial advice. All accounts are subject to terms and conditions.