Money

The best student bank accounts for 2024

Published

3 days ago

September 16, 2024

The best student bank accounts for 2024

Getting a student account can be an exciting time – particularly if you haven’t had much experience managing your own money before.

The best account choice will depend on your preferences, so think about whether a bank has a branch in your university town, should you want to visit with any questions.

One provider might offer a student account perk that particularly suits you – such as a student railcard, which could save you a lot of money if you’re moving a long way from home.

Weigh up the pros and cons of each option, as we highlight some of this year’s best features.

The best rates

It’s quite unusual for a student current account to pay interest on the account balance – possibly because of the assumption that many students will spend much of their time in their overdraft.

But, if you know you’re unlikely to go into negative numbers, your best bet is TSB, which pays a generous rate of 5pc on balances up to £500. Elsewhere, Lloyds Bank pays 2pc on balances up to and including £5,000.

With Halifax, you can earn 0.5pc on any account balance.

The best overdraft limits

The most generous interest-free overdrafts are with NatWest and RBS, offering up to £3,250 in the third year of study. In year one and two, they both offer up to £2,000, limited to £500 in the first term of year 1.

Below this, HSBC and Nationwide Building Society offer up to £3,000 in the third year of study. In year one, they both offer up to £1,000, rising to £2,000 in year two.

Lloyds Bank’s student account offers an interest-free tiered overdraft of £1,500 in years one to three, which can be extended to £2,000 if you’re studying for longer, available for years four to six.

A 0pc overdraft is particularly handy for students, who may have expenses to pay such as rent before they receive any student loans or grants. However, care must be taken to ensure you don’t breach the overdraft limit, or you could be liable for fees and interest of up to 40pc.

Some banks offer overdrafts that are “guaranteed”, while others offer “up to” overdrafts, which depend on your credit record.

The HSBC student account offers a guaranteed £1,000 interest-free overdraft in the first year, but the higher limits aren’t guaranteed in later years.

Katie Brain, banking expert at Defaqto, said: “Most students need access to an arranged overdraft to help with their living expenses. It is always important to remember this is a debt that needs to be paid back, so use it sparingly.

“Some providers also require a minimum amount to be credited to the account each term to qualify for an overdraft or extended amount.”

Santander, for example, will automatically give you a £250 overdraft, rising to £1,500 in the first year if you pay in at least £500 every four months. Your overdraft will then automatically increase each year.

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