Many young people will be entering into a relationship in the next few weeks that will last years or perhaps even decades, so it is important that they choose the person who makes them happy and where they will be treated well.
We’re not talking about romantic relationships – we’re talking about student accounts. It’s that time of year when branch banks and building societies try to woo students heading off to university with eye-catching freebies and generous overdrafts, in the hope that at least some of them will stay as customers long after they’ve finished their studies.
You don’t have to have a student account – you can opt for a regular checking account. However, student accounts offer features you wouldn’t normally get elsewhere.
Here we look at the discounts and interest-free overdrafts offered by the major providers.
NatWest/RBS
The advantages: £100 cash and a free Tastecard, valid for four years and with offers such as up to 50% off your food bill and two-for-one meals. NatWest/RBS says the Tastecard is worth £55 a year, although at the time of writing annual membership was available for £29.99.
Interest-free overdraft: Up to £2,000 from the first year (capped at £500 in the first semester of the first year). Up to £3,250 from the third year.
Is there anything else I should know? This year, NatWest is the bank with the most generous interest-free overdraft offer, says Rachel Springall on the website Moneyfactscompare.co.uk.
NatWest and RBS came first in the Save the Student banking survey earlier this year, with student satisfaction scores of 4.28 and 4.17 out of five respectively.
Santander
The advantages: The Edge student account includes a free four-year railcard for 16-25 year olds worth £100, giving students up to a third off most rail tickets. There is also a prize draw for new customers, where 20 students can win £27,750, the equivalent of three tuition fees, and 30 students can win £9,250, the equivalent of one year’s fees. To enter, customers must open a student account and deposit £500 between 15 July and 30 September – this could be your first student loan payment if it’s received on time.
Interest-free overdraft: ‘guaranteed’ £1,500 for the first three years. This can rise to £1,800 in the fourth year and up to £2,000 in the fifth year (if students continue their studies).
Is there anything else I should know? According to a survey by Save the Student, Santander was the most popular bank among students, with more than a fifth (21%) of respondents using it. However, in terms of student satisfaction, it was pushed into third place this year by NatWest and RBS, after holding the top spot for three years.
Nationwide
The advantages: The building society is offering £100 in cash and £120 in Just Eat vouchers, paid out as £10 a month for the first year.
Interest-free overdraft: up to £1,000 in the first year, up to £2,000 in the second year and up to £3,000 in the third year (and beyond, if applicable).
Is there anything else I should know? If you also open a savings account with Nationwide, you can receive an additional £100 each year through the Fairer Share scheme.
Some students will like the fact that Nationwide is a mutual organization (owned by its members, not its shareholders) and donates 1% of its profits to charity.
Lloyds Bank
The advantages: £110 cash. There is also a 20% discount on selected Students’ Union events at 29 universities in the new academic year – see the website for the list.
Interest-free overdraft: up to £1,500 in years one to three (£500 in the first six months, rising to £1,000 in months seven to nine and £1,500 from month ten) and then up to £2,000 in years four to six (if applicable).
Is there anything else I should know? Students can earn 2% interest on positive account balances between £1 and £5,000, and Lloyds’ Everyday Offers scheme lets them earn up to 15% cashback at retailers such as Asos, Domino’s and Sainsbury’s.
HSBC
The advantages: No freebies for new customers of the bank. From 15 August to 30 September, existing HSBC customers who apply for a student account or convert a basic or child account will receive £125.
Interest-free overdraft: up to £1,000 when you open. You can request an increase of up to £2,000 in the second year and up to £3,000 in the third year.
Is there anything else I should know? Students have access to the bank’s Home&Away scheme, which offers discounts on things like shopping, dining and travel. They can also put money into an HSBC savings account, which earns 5% interest.
Barclays
The advantages: a free three-year subscription to Perlego, an online library of academic and non-fiction titles – normally costs £96 per year.
Interest-free overdraft: up to £1,000 in the first year (up to £500 during the first semester), then up to £1,500 in the second year and beyond.
Is there anything else I should know? Barclays has been the subject of demonstrations by anti-war activists and climate campaigners. Earlier this year, it suspended sponsorship of all Live Nation music festivals for 2024 after bands and fans protested against the bank’s financial links to arms companies that supply Israel. Its chief executive responded in the Guardian, saying: “Like other banks in the UK, we finance some companies that manufacture arms, in addition to their civilian products,” but “we are not an investor in any of these companies, although we occasionally hold shares in them on behalf of our clients.”
Halifax
The advantages: £110 cash.
Interest-free overdraft: up to £1,500 for the duration of your course (and for up to three years after you graduate).
Is there anything else I should know? Students earn 0.5% interest on any positive balance, and with Halifax’s Cashback Extras program they can earn up to 15% cashback at retailers such as Costa Coffee, Just Eat and Sainsbury’s.
Bank of Scotland
The advantages: £110 cash.
Interest-free overdraft: up to £1,500 in years one to three (£500 in the first six months, rising to £1,000 in months seven to nine and £1,500 from month ten) and then up to £2,000 in years four to six (if applicable).
Is there anything else I should know? The bank’s Everyday Offers program allows students to earn up to 15% cashback at select retailers.
TSB
The advantages: No big freebies, but various discounts including 35% off a monthly pass to Hussle gym and 25% off AA roadside assistance.
Interest-free overdraft: £500 in the first six months, rising to £1,000 in months seven to nine and up to £1,500 from the tenth month.
Is there anything else I should know? Students can earn 5% interest on account balances up to £500.
Monzo: a backup option?
The app-based bank Monzo does not offer a separate account for students, but is very popular with them: 5 percent of those surveyed by the website Save the Student had an account.
Students may want to use the standard account for some of their day-to-day expenses. Many like the features that make budgeting, saving and splitting costs easier. For example, you can organize your money into “pots” for grocery shopping and nights out.
Crucially, though, there’s no interest-free overdraft or buffer. Standard overdrafts are available (Monzo charges 19%, 29% or 39% EAR), and those who are eligible can get a limit of up to £2,000.
Students on the ‘Sales argument“that attracted them
When it comes to opening a student bank account, the choice can be overwhelming. We asked some current students and graduates how they decided where to invest their money.
The decision is often a trade-off between a large interest-free overdraft and the perks available – in most cases it was the free perks that influenced students’ decision.
Arushi Ramaiya switched from NatWest to HSBC’s student account, mainly because of the £100 cash on offer. Amie Medcalf, who switched from Santander to NatWest, was also attracted by the £100 cash and free Tastecard. She kept some money in another account because she felt it was safer than leaving it all in one bank.
Travel can be a big expense, especially if your university is far from where your family lives. For Alice Ryb and Anna Elsner, who commute to the University of Edinburgh from London and Oxford respectively, the free 16-25 rail card was “a huge selling point” for the Santander student account.
Similarly, Harleen Uppal, who moved from Birmingham to Manchester to study, says the free rail pass was “the only reason” she chose a Santander account. “I went home about every two weeks for the first year – I was just constantly travelling back and forth,” she says. “It was also a really good deal in the summer.”
Svenja Helmold was less interested in overdrafts and perks than in finding a bank that aligns with her values. “Having an ethical, sustainable bank is one of the best things you can do for the environment,” she says. Nationwide stood out as an ethical organisation that offers a student account. She says the staff were friendly and helpful – and they sent her cookies when she started university. Mahika Ravi Shankar
