Where are the best student accounts for university goers?Last modified:
Looking forward to heading off to university soon? There’s plenty to do but make sure you’ve got your finances in order first. Don’t choose by freebies!
With university life comes a number of discounts, freebies and perks that businesses use to entice you in – but when it comes to your finances is this the best way to choose?
Over the next couple of months thousands of students will be going off to university and starting their lives as freshers. The big banks are currently on a drive to get students onboard in the hope that they’ll then stick with the bank for years to come, but what kind of things do you need to watch out for?
Don’t fall for short term gains
Although the banks might be offering initial perks like high street vouchers and signing up bonuses, it’s worth taking a moment to research those that will be better in the long run. That year of Amazon Prime membership might seem great at first, but if you’re going to then lose out with a smaller overdraft then it’s pointless.
When shopping around check for things like an account that actually pays you interest, or offers a decent-sized overdraft in case you need to dip into it.
What freebies do banks offer?
From free cash to discounts for eating out, the banks know what students want. Some banks offer something for everyone, such as the Deliveroo discounts from Santander, but some banks like HSBC have more niche rewards like a one-year British Cycling fan membership, discount on bike insurance and 10% off at Halfords – all good things if you’re into that sort of thing.
Make sure when you’re looking at the perks that you again go for longevity. Retailer vouchers can be nice, but the value doesn’t compare to how much you could save with a Rail Card valid to up to age 25, particularly if you’re planning on visiting home quite frequently or commuting after graduation.
What’s the deal with overdrafts?
Arguably it could be said that it’s not wholly responsible for banks to be luring students in with the promise of huge overdrafts, but as long as it’s used responsibly then it can be a good way to help you manage your money and be a useful safety net should you need to use it for an emergency.
When looking for student accounts, look at the largest interest-free overdraft. The saving you will make in the charges will be much more rewarding than a short term perk, particularly if you find that you need to cover a rent payment whilst waiting for your loan to come through, or plans change and where you thought you’d get a part time job, you now don’t have time.
Be smart with in-credit interest
Of course, if you’re really planning ahead then you’ll look past the overdraft and freebies and towards making money on your in-credit balance. If you’re managing your finances correctly and finding that you’re often in credit, you could start to reap the rewards of interest.
For example, Nationwide’s FlexStudent Current Account pays 1% on in-credit balances of up to £1,000, whilst Santander pays 3% up to £2000. Although it may not seem much initially, every little helps – particularly if you’ve got your student loan to think about after graduation too!
Things to watch out for
Don’t forget you’ll probably be doing most of your banking on the go, so looking at things like functionality of the banks’ apps will be helpful too. Some also don’t offer online banking as standard, so you’ll need to make sure you can sign up quickly and keep a close watch on your balance.
You might also need to go into the bank to apply, so make sure to keep things ticking along nicely by taking your:
- Photo ID
- UCAS confirmation
- Offer letters from your university
Use credit responsibly
Please don’t forget that your interest free overdraft has an expiry date! For some it may be after graduation, whereas some accounts like Halifax give you an additional year after you finish.
Make sure that if you are using your overdraft facility that you’ve got a plan in place to get you back into the black before the charges kick in – they can be quite hefty and some banks even charge you daily fees.