Let’s face it: as a University student, you’ll probably find that you’ll need some extra financial help in the form of an overdraft.  The good thing about opening a student bank account is that they all offer agreed amounts of 0% interest overdrafts, meaning you can spend money that you don’t physically have (up to an agreed limit) which you won’t need to pay interest on provided you pay the money back in time. Here we are offering a comparison of student bank accounts to help you decide which is the best for you.

Our key piece of advice would be to open up a bank account that offers the biggest 0% overdraft – although as you’ll see further on in this article, while some banks claim they offer large interest free overdrafts, in the small print it’s confirmed that it is simply an ‘up to’ amount, meaning your 0% overdraft is likely to be a lot smaller.  While freebies can be enticing, unless they are of benefit to you (such as a railcard), don’t let them sway your decision.  Before committing yourself to a specific account, it’s best to either contact the bank or arrange a meeting in order to get the full amount of information.

One thing to note is that all of these bank accounts are only available to students who are permanent residents in the UK (defined as having resided here for a minimum of the last 3 years), so international students will not be eligible for these.

1. Santander

Interest: 1%                Overdraft: From £250

Low charges for exceeding overdraft limit, 1% interest rate on credit balances and a free railcard makes this student account our top choice!

You’ll automatically get a £250 interest free overdraft limit when you open up the account, which increases to £1,500 if you deposit a minimum of £500 each time; increasing further to £2,000 by year 5 (if you’re still at University).  With this account, you’ll receive a 1% interest rate on credit balances up to £500, plus a free railcard for 4 years (worth £120), saving you up to 1/3 on travel – perfect for all of those trips home!

You’ll need to take into account the costs incurred if you exceed your overdraft limit, although they are very low, with a £5 daily charge (up to a maximum of £50 a month).

2. HSBC

Interest: 2%                Overdraft: From £500

Impressive 2% interest rate on credit balances, and ‘Student Exclusive’ deals and discounts

HSBC offers an automatic 0% interest overdraft limit of £500 once opened; and although they state this can increase to £3,000; most students have found that the max they’ve been able to agree to by the end of the first year is £1,000.  However, if you’re not likely to rely on your overdraft, HSBC can be a good account with the highest interest rate on credits of 2% (although it’s only up to £1,000).  You also get access to a ‘Student Exclusive’ website that offers a range of deals and discounts from everything to food, retail and travel; helping you to save a little bit extra!

Be aware that for unarranged overdraft fees that exceed your limit, you’ll be charged a returned item fee of up to £25 per item.

=3. NatWest

Interest: 0%                Overdraft: From £500

Offering some of the lowest charges for spending over your overdraft limit, plus you’ll receive a free ‘Tastecard’

NatWest’s staggered overdraft limit starts at £500 for the first six months, rising to £1,000 after the first year, and then an extra £250 for each subsequent year.  In order to be eligible for this, you need to deposit at least £750 into the account every 6 months and make at least 3 transactions – terms that can easily be met.

If you register for online banking and paperless statements, you’ll receive a ‘Tastecard’, giving you 2 for 1 and 50% discounts at thousands of restaurants across the UK, helping you to enjoy your time as a student easily and cheaply.

One thing to bear in mind if you’re considering opening a student account with NatWest is the charges should you go over your overdraft limit.  For overspending of £25 or more, there’s a daily charge of £6, with a maximum of £60.  This is amongst the lowest of fees out of the student bank accounts, so if you’re concerned that you might exceed your limit, this is a good account to go for.

= 3. RBS

Interest: 0%                Overdraft: From £500

As the owner of Natwest, the features are the same, with low charges for spending exceeding your overdraft limit, in addition to a free ‘Tastecard’.

RBS’ student account offers virtually the same features as NatWest.  Once the account has been set up, there is 0% interest £500 overdraft limit for the first 6 months, £750 for the next six months, £1,000 after a year, which then increases by £250 every year after.  You’ll also receive a free ‘Tastecard’ when you sign up for online banking and paperless statements.

The £6 daily charge up to a maximum of £60 for spending of £25 or more over your agreed overdraft limit is the same for RBS.  In all honesty, there’s no differentiation between RBS and NatWest, so if you’re considering opening an account with one of these two banks, it doesn’t matter which one you decide on!

5. Lloyds TSB

Interest: 0%                Overdraft: From £500

Student account with great incentives, including a free NUS card for 3 years and a £75 discount for STA Travel

Lloyd’s offers a pretty standard 0% interest £500 overdraft limit, which you can apply to increase over four years, at a maximum rate of £2,000.  The main attraction of this account is the generous benefits you receive – a free NUS card for 3 years (worth £36) and a one-off discount voucher of £75 for STA Travel; perfect if you fancy a trip away in the summer!  You’ll also be eligible for Lloyds’ ‘Save the Change’ programme, where everytime you buy something on your debit card, the value will be rounded up to the next pound and the change transferred to your savings account.  You might not be saving you loads, but it’ll get you a free coffee and a cake!

If you’re considering the account, be aware of the costs incurred if you exceed your overdraft limit – whilst the APR rate might sound low, there’s also a £6 monthly fee and a £10 returned item fee to consider; in addition to a daily fee of between £5-£10 dependant on how much you’ve spent.

6. Co-op

Interest: 0%                Overdraft: From £1,400

Co-Op offers the highest starting rate of interest-free overdrafts, and is known to provide excellent customer service

To be eligible for the £1,400 0% overdraft limit, you’ll need to deposit £300 into your account once it’s opened.  These rates will then rise to £1,700 in your second year and £2,000 in your third year, in case you want to save up for something expensive.

The great thing about Co-Op is its customer service – following a recent Money Saving Expert poll of 9 banks, 74% of customers agreed they’d received excellent customer service, placing it in second place.

If you want to get this bank account, be aware of the 9.9% APR rates for any agreed borrowing, and the high 18.9% rate if you go over your limit without arranging it first, as it could put you out of pocket.

7. Barclays

Interest: 0%                Overdraft: From £200

Interest-free overdraft limit between £200-£2,000

Barclay’s student account offers a £200 interest-free overdraft limit when you first set up your account, with the opportunity to extend this to £2,000, although this isn’t guaranteed.

The 8.9% interest rate for exceeding overdraft limits is lower than many other of the student accounts; although if you spend more than £3,000 then you need to take into account the extra £8 daily charge.

However, there is no interest for credit balances, and no other incentives for signing up, unlike some other banks; although you are able to personalise your debit card with a photo of your choice for free of charge, unlike Halifax, where they charge £5.

8. Halifax

Interest: 0.1%                Overdraft: From £1,000

Potential £3,000 interest-free overdraft limit, with 0.1% interest rate on credit

Halifax offers a relatively high starting point of interest-free overdraft of £1,000, with the opportunity to increase this to £3,000, although it’s decided on a case-by-case basis.  The 0.1 interest rate on credit might not sound like a lot, but many other student accounts don’t offer anything at all; and it will help you to earn a couple of extra quid.  This account also allows you to personalise your debit card, though it will cost you £5.

If you’re considering getting this account, be aware that the fees are huge if you go over your agreed overdraft limit – you’ll be charged 24% AER on top of a monthly fee of £28, and a £10 returned item fee!

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