Student Bank Accounts: Why They're Worth Considering

Student bank accounts are designed for university students and typically offer interest-free overdrafts and rewards.

Ruth Jackson-Kirby Published on 07 December 2020. Last updated on 20 January 2021.
Student Bank Accounts: Why They're Worth Considering


If you’re about to start higher education, then you’re entitled to open a student bank account. Offering interest-free overdrafts and rewards, a student bank account can really help your finances while you are at university.

How do you choose the right one for you? Read on to find out everything you need to know to pick the perfect student bank account.

What is a student bank account?

There is nothing complicated about a student bank account. It is simply a current account designed to be used by people enrolled in higher education. You can pay money in or have any income you get paid into it, and then use the account to pay your bills or withdraw funds.

One benefit a student bank account offers that a standard current account does not is large interest-free overdraft facilities. An overdraft allows you to borrow money from your bank through your current account if it’s at zero. This can be really helpful if you are going to have to borrow while you are studying.

Who can get a student bank account?

To apply for a student bank account, you need to be at least 17 years old and prove you are in higher education. Banks accept the following as proof:

  • A Universities and Colleges Admissions Service (UCAS) confirmation letter of an unconditional university offer.
  • A UCAS confirmation letter of a conditional university offer along with A-Level results that meet the conditions of the offer
  • A letter from your university confirming your place

Is it worth getting a student bank account?

Yes, if you’re a student and looking to open a new bank account, they can be a good option. Student bank accounts offer perks that often are unmatched by other types of current accounts. This is because banks know your worth — most people rarely switch their current account. If a bank wins your custom when you are a student, it may well keep it for life. And over the years the bank is likely to make money from you through overdrafts and fees as well as by cross-selling you other products such as loans, credit cards and mortgages.

Play your bank at its own game by not being swayed by freebies and choosing the best student account for you. Then, once you’ve left university and repaid your overdraft, remember to shop around for the best current account.

How to get a student bank account

If you have your proof that you are a student, then you are ready to apply for a student bank account. You’ll also need to provide proof of your identity (passport, birth certificate or driving licence) and proof of your address (a mobile phone bill, bank statement or your UCAS letter may be accepted).

You should be able to apply for your student bank account online or in branch, depending on the bank’s requirements.

How to choose the best student accounts

Don’t be swayed by the retail discounts, cash back or other gifts banks hand out with their student accounts. The more important thing is getting the biggest possible interest-free overdraft, as it will help you fund your way through university while avoiding other, more expensive forms of debt, such as loans, credit cards or standard overdrafts.

The only exception to this is if the free gift on offer is likely to save you a large amount of money. For example, if you are going to be regularly travelling by train, a four-year railcard could be a big help.

When comparing student accounts, also check whether the overdraft on offer is ‘guaranteed’ or ‘up to’. If it’s the latter, you will be credit checked and will get the big overdraft on offer only if you have a good credit record. Try to stick to accounts with a ‘guaranteed’ overdraft amount, as chances are you have a limited credit rating.

What about postgraduate accounts?

If you moved onto a postgraduate course, it used to mean switching to a bank’s postgraduate account, but these are now rare. Instead, you can open a new student account or extend your current one.

What happens after I graduate?

After you’ve sat your finals and got your degree, your bank usually will convert your student account into a graduate account. At this point, your interest-free overdraft will start to shrink in order to encourage you to clear your debt.

But don’t assume your existing bank’s graduate account is the best option for you. Shop around and compare what’s available against what your existing bank offers.

About the author:

Ruth is a freelance journalist with 15 years of experience writing for national newspapers, magazines and websites. Specialising in savings, investments, pensions and property. Read more

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