Illustration by Emily Nguyen‍

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September is here, your offer is finalised, and you’re getting ready for university. You’re probably going to be living on your own, so you’ll need a bank account, but what bank account should you choose? Well, don’t fret because we are here to help!

Types of bank accounts

There are many different types of bank accounts, but in today’s blog, we will be focusing on the three most relevant bank accounts to you as a student.

Current account

A current account is suitable for everyday banking needs, and almost everyone is eligible. The features include

• overdraft facilities (there will be a charge of up to 40% to use this)
• debit card/cash card
• internet and phone banking
• interest on the money in the account
• ability to set up direct debits and standing orders.

However, if you’re a student, why not take advantage of your status, and enjoy all the perks of opening a student account?

Student account

These are some of the features of student bank accounts in the UK

• overdrafts of up to £3,000, interest-free
• repay after graduating
• The limit set by the bank
• increased only by agreement during student years
• charges might apply if the limit exceeded
• could lower credit score
• free perks, such as cash or discounts
• some banks offer credit cards
• usually fixed and relatively low credit limits

What to look for when choosing a bank account

Overdraft

One of the most significant advantages of a student bank account is the interest-free overdraft. An arranged overdraft is a common way of borrowing money through your current account. Overdrafts can be useful for some people. They can help you avoid fees for bounced or returned payments. These happen when you try to make a payment but your account doesn’t have enough money in it. This unique feature allows you to only have to pay back what you borrow and you won’t have to do so until you have finished your course. However, overdrafts should only be used for emergencies or as a short-term option. Don't treat it as free money and instead plan ahead, which starts with understanding the conditions. Once you leave uni, most student bank accounts automatically become a graduate bank account, which deals with repaying your overdraft over a certain period.

The stated interest-free overdraft is often the maximum that banks offer ("up to"). For many banks, this amount is only available after a certain period of time at university and only to students with a decent credit rating. Most banks will offer around £1,500 - £3,000 maximum for overdrafts but it will usually take you as little as 1 term and as long as 5 years to be eligible for the maximum.

One thing to look for is that although banks like Halifax advertise that students can get the maximum overdraft within their very first year, it is doubtful that it will happen. To increase your overdraft amount, you’ll need to keep hounding the bank throughout your time at uni, and they’ll judge applications on a case-by-case basis. The amount you get will also depend upon your credit history and spending habits.

Freebies

Many banks will offer different incentives to attract you to open a student account with them. These free perks can range from discounts on certain services to straight-up cash. Below is a table comparing all the freebies you'd get from different banks:

Freebies such as travel cards can be very useful for students who plan on visiting home every now and then during holidays. You can save a lot on travel expenses with these freebies. However, these perks may seem very attractive at first, but it is vital to remember not to be distracted by them, you should always prioritise the overdraft amount over freebies.

International students

Opening a student account for international students is similar for you, but the perks are very different. 

Overdraft

Your account may come with a minor overdraft, usually under £100, but international students usually won’t be allowed to apply for bigger overdrafts. Bank accounts explicitly aimed at international students generally don't come with an overdraft as they don't consider you a long-term customer. 

Transaction fees

As an international student, one of your biggest concerns should be transaction fees, especially if you plan to send or receive money from home. Banks often take a commission fee of between 4% - 6% for converting to your desired currency, on top of the service charge. Below is a table comparing all the transaction fees you'd be charged by different banks:

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Another way to save on transaction fees is to make significant transactions at long intervals using services such as Wise, so for example, transferring all your fees, living expenses at the beginning of each term if you have the financial ability to do so.

Summary

In conclusion, we can’t tell you which specific bank to choose to start your student account because, at the end of the day, it all depends on what matters the most to you. Whether you know you will be arranging overdrafts or if you care more about the discounted transport you’d get with a travel card. However, we can tell you that the things mentioned above are definitely things to consider when choosing one.