Freshers' survival: student banking guide
You've probably already got a bank account, but becoming a student opens up more financial options to help you with the day-to-day costs of university life...
- Best and worst student bank accounts revealed
- How to open a student bank account
- Overdrafts explained
- Should I get a credit card?
- Which student bank accounts have the best ‘extras’?
- How to track your spending
- Staying safe and secure
- Can I switch my student bank account?
- More life skills...
Best and worst student bank accounts revealed
Santander and Nationwide offer the best student accounts, according to the latest analysis by Which? Money and Which? University.
We surveyed 3,379 university students about their student bank accounts in March-April 2018, asking them to rate how satisfied they are, as well as how likely they are to recommend the brand to a friend.
Santander and Nationwide seem to leave more of their students smiling than their rivals, such as HSBC, Barclays, Halifax and Natwest.
Discover where you should put your money by checking out our list of student bank accounts on the Which? Money site. We also have star ratings for each bank for customer service, complaint-handling, and more.
How to open a student bank accountMany banks let you apply online for a student account, but you’ll still have to either take (or send) supporting documents to your local branch. Once you’ve decided on which student bank account you’re going for, it’s a good idea to source the following:
- Photo ID Your passport or driving licence will do. You may need two separate forms of photo ID.
- Proof of address This could be a bank statement, or maybe even your driving licence - and can be your home address.
- Proof of student status E.g. confirmation you’ve been accepted by your uni (AS12 letter) or a copy of your Apprenticeship agreement signed by your employer.
Tip! Don’t just choose a bank because they have a branch on your campus. While it could be useful, most banks will have branches in your local town centre and online banking as standard. In fact, this might be something you look out for when visiting the local area at an open day.
Overdrafts explainedA planned overdraft lets you withdraw additional money, so you don't need to worry too much if your balance starts approaching £0. It gives you some breathing space, which could prove a lifeline if you're waiting for your next student loan instalment to go in.
Most student accounts come with a 0% overdraft up to a certain amount, meaning you don't pay any interest on what you borrow. Different banks offer different 0% overdraft amounts...
Don't think of your overdraft as 'free money', but rather an extension until more money comes in. Once you graduate, your limit will be gradually reduced; so you'll need to pay your overdraft off within your interest-free allowance to avoid additional charges.
Get advice on how to clear your student overdraft debt with our useful guide.
Should I get a credit card?Credit cards let you pay for items on borrowed credit, which you must pay back (with interest) over a period of time. The amount of interest you pay depends on the Annual Percentage Rate (APR) for that card, and how long you spread your repayments over.
Like overdrafts, credit cards can be very useful when used properly. For example, a credit card can be a lifesaver if you need to make a large one-off purchase (e.g. tech for your course, flights for a trip). They also provide additional consumer protection under Section 75 of the Consumer Credit Act.
Just make sure you don't treat it as a daily financial source, nor as a method to get out of other debt. You don't want to get yourself into a situation where you can't afford paying everything off.
Questions about student finance and paying for university? Browse our full finance advice section.
Which student bank accounts have the best ‘extras’?While you shouldn’t base your decision on which student bank you go for entirely on freebies, it’s worth bearing them in mind - especially if you really think they could save you a lot of money.
Banks want to capture you as a customer now, in the hope that you won’t bother reassessing after you graduate. In reality, you should look around after you graduate, as we explain below.
Some great student bank account freebies we’ve seen for 2018/19 are:
- Santander A four-year 16-25 railcard, providing you pay in at least £500 every term and register for online banking
- HSBC A free £80 Amazon gift card plus a year of Amazon Prime Student, if you open the account by 31 December 2018.
- Natwest and Royal Bank of Scotland Choose from: four-year National Express Coachcard; one-year Amazon Prime Student; or four-year Tastecard.
How to track your spendingSet up text alerts, and use online banking/apps to keep track of your spending instantly, on the go.
With these, you can check your balance in a few seconds wherever you are and you'll be less tempted to splash out on something you shouldn't when you see just how much you have. You can set these up to notify you when your balance reaches a certain balance, so you know when to curb your spending.
They're also handy for quickly transferring money to friends and housemates e.g. paying your portion of a utility bill.
Amongst the hubbub of uni life, it’s easy to lose sight of how much you’ve spent in a week or month - especially when it’s so simple to make a contactless payment! But it’s no use burying your head in the sand, so keep an eye on your spending to prevent any nasty shocks. top 10 of things to remember to budget for.
Staying safe and secureKeep any sensitive information safe and secure, such as account numbers, security details and passwords.
If possible, memorise this information. If you’re saving them in a doc, password-protect that for an extra layer of security.
Can I switch my student bank account?You can - and you should if it makes sense to do so.
At the end of each year, evaluate whether you're getting the most from your current bank. Once you're at uni and have a better sense of your banking needs, your priorities might have changed when it comes to your bank. See whether other banks have changed their offering to students since you last looked and if this is better than what you're getting.
Don't be put off switching banks because you think it's complicated; apart from making an appointment at a branch to set up an account, your new bank should be able to take care of everything for you (including closing your current account, if you wish).