The best 0% overdrafts and freebies for students.
I write a lot on the blog about the best bank accounts, but picking a student bank account is very different.
I chose my bank at uni, many years ago, because it was one of two or three on campus. In the late 90s it was really useful to have easy access to your bank so location was important.
It’s very different today. For a start you can manage everything online so locality hardly makes a difference. Instead, current students should choose an account that’s going to be worth the most you.
That generally means choosing one with benefits – namely interest-free arranged overdrafts and free things like Young Person Railcards. But they’re not the only considerations.
Here are the factors and top accounts right now that you should take a look at.
Student 0% overdrafts
A 0% overdraft could be essential to help you get through your time at university. The money in there won’t have any interest added on top, making them the cheapest way to borrow money.
Of course, you need to be careful about using it and not treat it as free cash as you will have to pay it back. You will generally have a few years after you graduate (and hopefully start working) to do this, but even so don’t spend from there just because it’s there.
The length’s of 0% overdrafts change between the banks – and you might not even get the advertised amount. If the wording says the overdraft is “up to” that means you might not get the high sum mentioned in the adverts.
But it’s might be best to not go for that large amount anyway as the bigger the overdraft the bigger the temptation to use it all. Instead, work out how much you think you’ll need to use and ask for that.
Plus, even if you think you won’t need one at all, it’s worth choosing a bank that offers one and applying for it at the start – you never know how things could change.
Some banks will also increase the size of overdraft each year (if you ask), which means you can’t blow it all in the first year.
However, there could be conditions attached to having one of these fee-free overdrafts, so make sure you read all the Ts&Cs upfront. It could be something like pay in £500 every term (Santander) or
There’s also the chance you could get rejected for the overdraft so check your credit file before applying. Most students won’t have much on their file, but it’s worth making sure there’s nothing wrong on there.
Nationwide – Guaranteed £1k yr one, £2k yr two, £3k yr three
Nationwide has a guaranteed £1,000 overdraft in the first year, going up by £1k in the second year, and again in the third. You’ll keep the £3,000 overdraft at 0% for the first year after graduation, and it drops to £2,500 for the next year, then £1,750 and then £1,000 – but watch out for costs from then on.
HSBC – Guaranteed £1k in year 1
HSBC will guarantee the same level in the first year, but further £1,000 increases in the second and third year are subject to approval. Once you graduate you get £1,500 interest-free for the first year, and then £1,000 for the second.
Student bank account freebies
When I was starting uni, all the banks had some kind of freebie in an attempt to draw you to them over another bank. I think I got a free Railcard.
Some of these save you a fair bit of cash – but they should generally be a second deciding factor once you’ve looked at overdraft options.
It also pays to check how much these freebies would cost if you looked around for extra deals and discounts. Often the value advertised is much higher than you’d actually need to pay.
HSBC – Free £100
The obvious winner here is a free £100 cash, which HSBC is currently offering. I like this one as you’re not limited to how you use the freebie, as you are with others.
Santander – Free 4-year railcard
If you are likely to be travelling by rail a lot then Santander offers a free four-year 18-25 Railcard, which will knock a third of train fairs. The railcard itself is worth around £100 (a three-year card costs £70 and one-year one £30). However you can use Tesco Clubcard points to get one for a third of the price so if the big supermarket near your halls is a Tesco you’ll easily earn enough points to buy one this way. Still if you can’t get or don’t want the HSBC account this is a decent freebie.
Natwest/RBS – Six months Amazon Prime or free Tastecard
Natwest and RBS both offer a year of Amazon Student and a £10 Amazon gift card, which sounds good until you realise you can get six months of Prime free as a student anyway, and then pay just £39 a year. So really this freebie is worth £30. As is the alternative option of a free Tastecard.
LLoyds – Free 3-year Totum card
With Lloyds you can get a free three-year TOTUM card. This is worth £32, though it’s worth checking to see if you can’t get those discounts anyway via the free basic TOTUM card or services like MyUniDays and StudentBeans.
Other good accounts
If you’re studying abroad
With Starling or Monzo banks get fee-free spending abroad making them cheap ways to spend if you are studying overseas for a term – or just for holidays and travelling in the Easter and summer breaks.
Monzo comes with monthly cash machine limit of £200, so you might be better going with Starling which has no limits.
However, you don’t get a 0% overdraft with either card so it could be that you get one of these just for when you are out of the UK.
If you’ve got some savings
The Santander 123 Student Account has 3% interest on balances between £300 and £2,000 making it the highest paying of the bunch. You’ll also get 1% on the first £100 and 2% on the next £200.
HSBC offers 3% in a Regular Saver for 12 months, and you can put £250 in each month – but this does mean you can’t access that cash until the year is over.
Nationwide’s student account also offers 1% on balances up to £1,000, though it’s non-student account – the FlexDirect – offers 5% for the first year on balances up to £2,500.
How to get a student bank account
You have to be over 18 and living in the UK to get any student bank account, and most will require you to be at the start of your first year to get the freebie.
You’ll need to show ID such as a passport, driving licence or birth certificate. You’ll also need to bring along proof of your acceptance to the uni or college – possibly your UCAS letter or university acceptance letter.
You don’t need to wait until you get to your university to open the account, so doing it now before you head off means you can get your bank card and PIN sent out and your online banking set up in advance.
Don’t stick with your bank forever
Banks go all out for your business as a student as they know there’s a good chance you’ll stick with them for the rest of your life – and that’ll make them money.
Don’t. Once you’ve taken advantage of your 0% overdrafts or freebies, look for the best account out there for you and switch. And maybe keep switching! You can see the types of offers currently on offer here.