Student Bank Accounts

There are a whole range of banks and building societies that offer accounts specifically aimed at students. These accounts are largely similar to normal current accounts, although they come with different terms and conditions.

Students are targeted by banks with a number of attractive offers in order to get their custom. This is where students need to be careful and ensure they take time to shop around and compare student accounts. By choosing the right account a student could end up saving a small fortune for the duration of their course.

Important factors to consider

When looking at the details of an account, students should take into consideration the following factors:

  • The level of interest on money in the account (for those that are in credit and have no overdraft), which can increase savings.
  • How much interest-free overdraft is available (the amount an account holder can go into the red without being charged).
  • The amount allowed for authorised overdrafts and loans (these must first be agreed with the bank and come with monthly charges).
  • The charges on authorised overdrafts and loans, as these vary from bank to bank.
  • The charges and penalties on unauthorised loans and overdrafts (where permission has not been granted from the bank in advance). U nauthorised overdraft charges can be very high.
  • Does the account come with a credit card? If so, what is the interest rate charged on it.
  • The qualifying period after graduation (to keep the same account, which will probably have better rates than other accounts). Many banks now have an option to move to a graduate account which may have better terms of interest or charges than an ordinary account, especially if an individual is still paying off an overdraft or loan.
  • Is there an interest-free overdraft available after graduating?
  • Does the account come with any ‘useful’ freebies such as a railcard or book vouchers? However, a student’s priority should be finding an a ccount that suits their longer-term financial needs, e.g. good interest rates and low charges, and not one that is purely based on free gifts.

 

Availability and services

As well as making sure all the financial terms and conditions of an account suit their needs, students should also look into how easily their funds can be accessed. For example, how close is the nearest branch and how many ATMs (automated telling machines) or cashpoints are located in, or around, the university/college area?

Students should also enquire about the services provided by the bank:

  • Is there is a free or local rate telephone banking service?
  • Does the bank offer online banking if so is it free of charge?
  • What are the opening hours of the branch?
  • Are branches open on a Saturday or late night?
  • How and where can cash and cheques be deposited?
  • Does the bank provide any specialist advice service?
  • Are there any charges for using another bank's ATM?

 

Student bank accounts can be difficult for international students to obtain, as most if not all major banks require a period of UK residency for accounts to be opened.

How to change Banks

Students that decide to change banks should always ensure they arrange the transfer of their direct debits and standing orders before closing their old account. Some banks and building societies can provide transfer packs that contain information to help students with this, while some banks will carry out the transfers for them as part of a free transfer service.

It is vital for students to remember to inform the student loans company of their decision to change banks so that they can arrange for the loan to be paid into their new account.

Students with bad credit

Students with bad credit may find it difficult being accepted for a student account, but banks should still be able to offer such individuals the chance to open a basic bank account.

Those with debts should discuss any potential problems with their bank or with a money adviser at their university or college. There are also various companies and voluntary organisations that provide expert advice and help on dealing with debt matters, such as the Citizens Advice Bureau, while others such as Experian can provide information on how credit rating and referencing works.

In case of a cash-related emergency, students studying at college or university may have the option of applying for an Access and Learner Support Fund or a Hardship Fund, and should contact their student welfare / student support team for advice on how to apply.

Student Internet Banking

Internet banking services in the UK have improved considerably over the past few years. Customers can now bank entirely online with companies such as Egg, Smile and Cahoot, which are known as standalone internet banks.

As a result of growing in popularity, student internet banking has become a highly competitive area for banks, with many of the standalone banks now offering dedicated student accounts.

In addition to the usual services provided through internet banking such as setting up, amending or cancelling standing orders and transferring money between accounts, these accounts come with an interest free overdraft until graduation and various other perks upon opening an account.

However, the quality and quantity of services offered can vary depending on the bank, so students should look carefully before making their choice.