The best student bank account for 2019-20

The best student bank account for 2019-20

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If you’re off to university, which student bank account should you choose? If it’s an interest-free overdraft you’re after, some student bank accounts will let you borrow up £3,000. Find out which is the best student bank account for 2019-20.

Student bank accounts for 2019-20: the biggest interest-free overdrafts

HSBC, Nationwide and Barclays offer the biggest interest-free overdrafts of up to £3,000. The other major banks offer between £1,500 and £2,000. Here’s a rundown of what the banks’ student accounts have to offer. We’ve started with HSBC, Nationwide and Barclays because they offer the biggest interest-free and fee-free overdrafts.

HSBC Student Bank Account

There’s a guaranteed interest-free and fee-free arranged overdraft of £1,000 when you open your account – for the first year. This goes up to £2,000 in the second year and up to £3,000 in the third year. This account is also available for Level 2+ apprentices in their first year of a qualifying course.

Cost of borrowing more: The overdraft is fee free. If you try to make a withdrawal at an HSBC cash machine that would take you over your arranged overdraft limit, you’ll get an on-screen alert. This will tell you how much money you’re able to take out.

In-credit interest: You don’t earn interest on your current account if you’re in credit, but you can open a Regular Saver account. This will pay you 3% interest on up to £3,000 for 12 months. You can pay in between £25 and £250 per month to this account.

Extras: If you’re a first year student  or an apprentice, you’ll get £100 if you open an HSBC student account by 31st December 2019. You can also apply for a student credit card with a credit limit of £500. This is not interest free. Instead, interest is charged at 18.9% APR.

JARGON BUSTER: APR stands for ‘annual percentage rate’. It’s a figure that shows how much interest you’d pay if you borrowed £1,200 over a year. It includes any fees that you have to pay on top of the interest.

You can also access discounts on the student exclusives website and get a free 12 month British Cycling Fan Membership worth £24. You must activate your membership by 31st December 2019.

Opening the account: If you are 18 or over, a UK resident and have accepted a place on a qualifying course, you can apply online, in a branch or over the phone.

Mobile banking: You can download the HSBC mobile banking app via the App Store and Google Play.

Graduate overdraft: There’s an interest-free overdraft of £1,500 during your first year after you graduate. This falls to £1,000 in your second year after graduation. If you go over your agreed overdraft, you’ll be charged interest at 19.9% EAR.

JARGON BUSTER: EAR stands for ‘equivalent annual rate’. It’s a figure that shows how much interest you’d pay if you remained overdrawn for a year.

Nationwide Building Society FlexStudent Account

There’s an interest-free and fee-free overdraft of up to £3,000. You can get an overdraft of up to £1,000 in your first year. This rises to £2,000 in your second year and £3,000 in your third year. You should get the increased overdraft each year as long as you pay in at least £500 per term from the date the account is opened. You also have to maintain a good credit record and ‘demonstrate good account behaviour’ (not quite sure what that means!).

Cost of borrowing more: There are no additional charges if you go beyond your agreed student overdraft limit. However, Nationwide says if you do go over your limit, you’ll need to pay money into your account so you come back to your agreed limit before you can carry on using your account. Basically, don’t go over the limit, is the message.

In credit interest: If your account is in credit, you can earn interest of 1% AER on balances up to £1,000.

Opening the account: You have to be 18 years or older to apply for the account and have been accepted for a full-time UCAS course at a UK institution for at least two years. You must have an unconditional offer and apply no more than five months before your course starts or no more than two months after it’s started. You can apply online and you need to provide details of your course and the university you’re going to.

Mobile banking: You can download the Nationwide app via the App Store and Google Play. You can make payments via Apple Pay, Google Pay and Samsung Pay anywhere that contactless payments are accepted.

Graduate overdraft: Your overdraft is interest-free and fee-free on up to £2,500 for the first year. That figure falls to £1,750 for the second year and £1,000 for the third year after you graduate.

Barclays’ Student Additions Account

There’s a fee-free overdraft of £500 when you open your account. In all, you can borrow up to £3,000 fee-free while you’re studying. That breaks down into an overdraft of up to £1,000 in your first year, up to £2,000 in your second year and up to £3,000 in your third year.

Cost of borrowing more: If a direct debit takes you over your arranged overdraft, you will be charged £8 for each transaction. This is capped at four charges a month. It’s not the same as a calendar month, instead it refers to the monthly ‘charging period’ that’s covered by your bank statement. In bank-speak, it’s called a charging month. So, the most you’ll be charged in a (charging) month is £32.

Extras: Get up to 10% cashback on brands such as Apple, Boots and Nike. You can find out about the cashback offer on Barclays’ website. You can get a personalised contactless debit card and can use Apple Pay or contactless mobile (for payments up to £100) to pay on the go. You can also send money to friends and family with Pingit.

SAVVY TIP: Pingit is a mobile money transfer system that Barclays has developed. You don’t have to be a Barclays customer to register with Pingit.

In credit interest: You won’t earn any interest if you’re in credit on your account.

Opening the account: You need to be 18 years or older and you can apply online, but will need to visit a branch to confirm your student status, address and identity. You will need to bring proof of your address for the past three years, the university or place where you’re studying, and course details.

Mobile banking: You can download Barclays’ mobile banking app via the App Store and Google Play.

Graduate overdraft: For your first year after graduation, you can get a fee-free overdraft of up to £3,000.  In the second year this falls to £2,000 and in the third year it’s up to £1,000. If you go over your overdraft you will be charged 50p per day up if you go overdrawn by up to £2,000 and £1 per day over £2,000.

Student bank accounts with lower overdrafts

Here are the other student bank accounts on offer (with a lower overdraft limit). We’ve started with those that have the biggest overdraft first:

Bank of Scotland Student Account

Fee-free overdraft of up to £1,500 in years one to three and £2,000 in years four to six. You can go overdrawn by up to £500 in the first six months, £1,000 in months seven to nine and £1,500 after that.

Cost of borrowing more: If you don’t have enough money in your account or you reach your limit, you may not be able to make any more payments. If a payment takes you over your limit or the Bank of Scotland refuse it, you won’t be charged.

Extras: You can get a free TOTUM card for up to three years if you open your student account by 31st October 2019. A three year card normally costs £32. You can also get cashback of up to 15% on selected purchases with Everyday Offers.

Graduate overdraft: For the first year after graduation you can apply for an arranged overdraft of up to £2,000 in your first year after graduation, £1,500 in your second year and £1,000 in your third year (subject to application and approval).

If you go over your arranged overdraft, you will be charged a daily arranged overdraft fee: 1p for every full £6 you borrow each day up to £1,250 and 1p for every further full £7 you borrow each day between £1,250 and £2,500. In some circumstances, you may be charged a third tier: 1p for every further full £8 you borrow each day over £2,500.

In credit interest: Not available.

Opening the account: You need to be 17 years or over (you have to be 18 to apply for an arranged overdraft) and you can apply online, but will need to go to a branch once your application is successful. You will need to bring with you your UCAS confirmation letter or a letter from your university or college confirming your place, proof of ID such as your driving licence and proof of address.

Mobile banking: You can download the Bank of Scotland app via the App Store and Google Play.

NatWest Student bank account

There’s an interest-free arranged overdraft of up to £500 in the first term and up to £2,000 after that.

Cost of borrowing more: You’ll be charged £8 for a refused payment if there is not enough money in your account. NatWest caps charges at £8 a month for unpaid transactions.

Extras: You can choose between one of the following three offers:

  • A Tastecard, which gets you 50% off food or two-for-one meals in thousands of restaurants. The card is valid for four years (you’ll need a smartphone to use it). A Tastecard usually costs £79.99 for one year.
  • One year’s Amazon Prime Student membership and £10 Amazon gift card.
  • A free National Express Young Person’s Coachcard for four years. This usually costs £30 for three years if you buy it online. It gives you a third off the cost of standard and flexible fares. There’s also 15% off the cost of travel to festivals.

You can also apply for a student credit card with a credit limit of £500. The bank charges interest at 18.9% APR if you don’t pay back what you borrow in full each month.

In credit interest: Not available.

Opening the account: You must be aged 17 or over and be a full-time undergraduate student or on at least a two year course at a UK University/College or you must be completing a full time postgraduate or nursing course lasting a year or more. You need to be 18 or over and have lived in the UK for three years or more to apply for an overdraft. The account is only available online.

Mobile banking: You can download NatWest’s app via the App Store and Google Play.

Graduate overdraft: Interest free arranged overdraft of up to £2,000 for the first year after you graduate. This is reduced to £1,000 interest free in year two. If you go over your arranged overdraft limit you will incur fees and charges (17.81% EAR). If you do not have an arranged overdraft or go over it, you will be charged £8 per day for unarranged overdrafts of more than £10.

Royal Bank of Scotland Student bank account

Interest-free arranged overdraft of up to £500 in the first term and up to £2,000 after that. You can access your account via their mobile banking app.

Cost of borrowing more: You’ll be charged £8 for a refused payment if there is not enough money in your account. RBS caps charges at £8 a month for unpaid transactions.

Extras: You can choose between one of the following three offers:

  • A Tastecard, which gets you 50% off food or two for one meals in thousands of restaurants, valid for four years (smartphone is required). A Tastecard usually costs £79.99 for one year.
  • One year’s Amazon Prime Student membership and £10 Amazon.co.uk Gift Card.
  • A free National Express Young Person’s Coachcard for four years (which usually costs £30 for three years if you buy it online). It gives you a third off the cost of coach travel.

You can also apply for a student credit card with a credit limit of £500 (18.9% APR).

Graduate overdraft: Interest free overdraft on the first £2,000 for the first year after you graduate, reduced to £1,000 interest free in year two. You will be charged 9.9% EAR if you go over your arranged overdraft. If you do not have an arranged overdraft or go over it, you will also be charged £8 per day for unarranged overdrafts of more than £10.

In credit interest: Not available.

Opening the account: You must be on at least a two year course at a UK University/College or you must be completing a full time postgraduate or nursing course lasting a year or more. You need to be 18 or over and have lived in the UK for three years or more to apply for an overdraft. The account is only available online.

Mobile banking: You can download RBS’ banking app via the App Store and Google Play.

Lloyds Bank Student Account

Fee-free arranged overdraft of up to £1,500 in years one to three and up to £2,000 in years four to six.

Cost of borrowing more: If you don’t have enough money in your account or you reach your limit, you may not be able to make any more payments. If a payment takes you over your limit or Lloyds refuse it, you won’t be charged.

Extras: You can get a free TOTUM card (which used to be the NUS Extra card) for up to three years if you open your account before 31st October 2019. A three year card normally costs £32.  You can also get up to 15% cashback with Everyday Offers.

In credit interest: Not available.

Opening the account: You must be 17 years or over (or 18 if you would like to apply for an overdraft), have lived in the UK for at least three years, and be studying full-time on a course of at least two years. Or you can be on a one-year full time access course leading to a degree.

Mobile banking: You can download Lloyds’ app via the App Store and Google Play.

Graduate overdraft: Your student account will automatically convert to a Graduate Account when you complete your university course. For your first year after graduating you get a fee-free overdraft of £2,000, in your second year you get £1,500 and in your third you get £1,000.

If you go over your arranged overdraft once you’ve graduated, you will be charged a daily arranged overdraft fee: 1p for every full £6 you borrow each day up to £1,250 and 1p for every further full £7 you borrow each day between £1,250 and £2,500. In some circumstances, you may be charged a third tier: 1p for every further full £8 you borrow each day over £2,500.

Santander 1|2|3 Student Current Account

Interest-free and fee-free arranged overdraft of up to £1,500 in years one to three and up to £2,000 if you stay on to year five (if your course is that long). You have to pay £500 into your account every term and register for online banking.

Cost of borrowing more: If you go over your arranged overdraft, you will be charged £5 per day (capped at 10 days in each monthly statement), plus for each transaction £5 if the payment is approved or £10 if it’s not. Santander caps charges at £50 per month.

Extras: You can get a free four year 16-25 Railcard, which could save you a third on rail travel, and would normally cost £70 if you bought it online (for a three year card). You can earn cashback of up to 15% with Retailer Offers.

You can also get a contactless debit card and access to Apple Pay, Android Pay, Samsung Pay, Fitbit Pay and Garmin Pay plus access to exclusive 1|2|3 World offers, such as 30 per cent off travel insurance.

Graduate overdraft: Interest free overdraft up to £2,000 in year one and two after you graduate. If you go over your arranged overdraft, you will be charged £5 per day (capped at 10 days in each monthly statement), plus for each transaction £5 if the payment is approved or £10 if it’s not. Santander caps charges at £50 per month.

In credit interest: You can earn 3% AER interest on money you have in your account between £300 and £2,000, 2% on balances from £200 to £300 and 1% on balances of £100 or more.

Opening the account: You can apply online or in branch, depending on whether you are a new or existing customer.

Mobile banking: You can download the Santander banking app via the App Store and Google Play.

TSB Student Bank Account

Interest-free and fee-free planned overdraft of up to £1,500, starting with £500 for the first six months.

SAVVY WARNING!: TSB had huge problems after its disastrous IT platform migration in April 2018. Up to 1.9 million TSB customers were locked out of their accounts, others reported fraud on their accounts and some had problems getting replacement cards. TSB’s Trustpilot rating is currently 0.9 out of 10.

Cost of borrowing more: You’ll be charged interest at 8.21% EAR if you go over your arranged overdraft limit. There is a £10 buffer.

Extras: The account offers Apple Pay and Google Pay and mobile banking. You can also apply for a credit card with a £500 limit (19.9% APR).

Graduate overdraft: Interest and fee-free overdraft of up to £2,010 in your first year after graduation, £1,510 in the second year and £1,010 in the third year. You will be charged a £6 monthly fee if you go over your overdraft by £10 and 16.77% EAR. You will also be charged £10 for a refused payment. TSB caps its charges at £80 a month.

In credit interest: There’s 5% AER interest if you’re in credit, up to a limit of £500.

Opening an account: As I’m writing (9th August 2019), you cannot currently apply online. You can apply in a branch as long as you bring ID documents. It has a list of ID documents that it will accept.

Mobile banking: You can download the TSB banking app via the App Store and Google Play.

Halifax Student Current Account

Fee-free arranged overdraft of up to £1,500 for up to five years (if your course lasts that long) plus an extra year after you graduate.

Cost of borrowing more: If you don’t have enough money in your account or you reach your limit, you may not be able to make any more payments. If a payment takes you over your limit or Halifax refuse it, you won’t be charged.

Extras: You’ll get a contactless debit card and up to 15% cashback on your shopping at selected stores, once you activate Cashback Extras.

In credit interest: You’ll earn 0.10% AER interest on any credit balance, paid monthly.

Opening the account: You need to be 18 years or older and you can apply online, but will need to go to a branch once your application is successful. You will need to bring with you your UCAS confirmation letter (original or print out), proof of ID and proof of address.

Mobile banking: You can download Halifax’s app via the App Store and Google Play. 

Related articles:

University scholarships in the UK

Your rights when you pay by card with recurring payment

How do student loans work? When do you have to repay your student loan?

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