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Banking
Most major banks offer full-time university students a special ‘student bank account’.
How does a student bank account work?
It operates in the same way as a normal bank current account, using a debit card for purchases and cash withdrawals. However, you will be able to spend (borrow!) money that you don’t have, the main feature being that they won’t charge you for this providing you don’t spend more than a pre-arranged limit. This is called an ‘interest free overdraft’.
All banks have different rules attached to their student accounts - you DON’T have to remain loyal to your current bank if there is a better deal elsewhere!
Consider what’s on offer before choosing a bank account:
| What is the overdraft Limit? | Will this increase each year? | Other useful information |
| Most major banks offer at least £1,000 in the first year | Most major banks increase the limit by a round £200 each year if the account is well managed |
Banks expect students to keep within agreed overdraft limits and prefer to see the overdraft reduced to some extent each year, possibly through paid work during the holidays; you will be expected to use it as your main account and have your student funding paid into it; banks do not normally allow students to have more than one student account. Poorly managed accounts may incur extra (often hefty) charges and may not be offered the increased limit; exceptionally the overdraft can be withdrawn requiring immediate repayment. |
Other questions to ask your bank:
| What will the charges be? |
For exceeding overdraft limit? Banks will have differing charging practices - make sure you read the small print. |
| How long after graduating will your overdraft remain interest-free? | Most banks will begin charging interest a year after you graduate. If you haven’t repaid your overdraft by then, talk to your bank about switching to a Graduate Account |
| What incentives are on offer to persuade you to become a customer? | Examples include a young person’s rail card; insurance for laptop/mobile ‘phone; NUS card; travel insurance; music downloads.... |
It is sensible to choose an account based on other factors first (such as overdarft limits, charges, interest free period after graduating). View incentives as ‘the icing on the cake’ |
