Our three top tips…
Go for the biggest 0% overdraft deal possible
Be wary of banks when choosing a bank – some give ‘guaranteed’ amounts, others ‘up to’ amounts – so ensure you’re comparing like with like. However, you must ask for the extensions each year, even on guaranteed limits – they’re not applied automatically. NEVER go beyond your 0% limit or you’ll face nightmare bank charges. If you’re desperate, ask your bank to extend your limit.
Never go over your overdraft limit
If you’re struggling, at least talk to the bank. Try to agree an extension but remember, you are likely to be charged interest, up to a huge 24% AER. It’s always far better to plan and budget to avoid this.
If not, or if you go over without permission, the charges can be enormous – up to £25 per transaction (so a shopping trip spending £30 in five debit card transactions could see you facing £125 of charges!) – beware!
After graduating, switch to a top graduate account
You’ll be pleased to know that for at least a year after finishing your course, you’re still eligible for preferential terms, including 0% interest overdrafts, allowing you to gradually pay off the debt.
Switch to the Top Graduate Account to continue getting the benefits.
Student accounts: The basics
What is a student account?
Student accounts are bank accounts made for those in higher education. They let you pay money in and out, and offer additional benefits such as an interest-free overdraft.
You’ll get a debit card, which allows you to pay for things in shops and online without the need to withdraw cash. Read Who Counts As A Student? for further details on who is eligible to open a student account.
What is an overdraft?
An overdraft facility allows you to spend more money than you have in your account, up to a certain limit. Student accounts provide a set level of overdraft interest-free for the duration of your course.
Remember the bank is just lending you this money. It will need to be paid back, so don’t get too comfortable. Always keep in your mind that’s it’s not actually yours, it’s the bank’s.
It costs nowt… UNLESS you exceed your overdraft
The cost of banking is measured in terms of interest rates and fees. Interest is the cost of borrowing money (or the reward for saving it). So 5% interest on savings means you earn £5 per £100 per year on the cash.
All of our top pick accounts provide an agreed interest-free overdraft limit, and anything up to that will not be subject to fees or interest – good news.
However, this is all provided you stay within your overdraft limit. Exceed it and doing so can cost up to £25 per transaction plus interest on top.
Remember…
You’ll need Ucas confirmation to open an account
Make sure you’ve got the right ID
Existing students can switch to grab same deals as freshers
Max the gain, then ditch & switch after uni
The overdraft cash ISN’T yours, but you CAN repay gradually
The Bank Accounts
The Co-op Bank – £2,000 0% overdraft
- In-credit interest: None
- Arranged overdraft cost: 9.9% EAR.
- Unarranged overdraft fees: 18.9% EAR plus £15 unpaid item fee (max £150 per quarter).
- 0% overdraft: Year one: £1,400 Year two: £1,700 Year three: £2,000
The highest guaranteed overdraft limit comes from the ethical Co-operative Bank. Successful applicants are allowed a £1,400 0% overdraft in year one, £1,700 in the second year and £2,000 in the third (as long as you pay in your student loans, and don’t incur charges). To get the increases, you must ask at the beginning of each year.
Biggest GUARANTEED 0% overdraft
Any agreed borrowing over the limit costs a reasonable 9.9% APR. But if not agreed, the rate jumps to 18.9% plus big charges on top, so don’t do it. If you apply for this, please let us know your experiences and any problems getting the full overdraft limit.
The Co-op doesn’t have an official graduate account, but you can keep the student 0% overdraft for a year after graduation – though other graduate accounts are likely to beat it.
Halifax – £3,000 0% overdraft
- In-credit interest: 0.1% AER
- Arranged overdraft cost: 7.2% EAR.
- Unarranged overdraft fees: 24.2% plus monthly fee of £28 and additional fees up to £20.
- 0% overdraft: All years: £1,000 initially, up to £3,000 (not guaranteed)
The Halifax student account gives overdraft limits of ‘up to’ £3,000, yet this is NOT guaranteed. Initially, you’ll be given £1,000. You must then ask for further increases although the feedback from last year tells us it’s not likely to go higher than £1,000 in year one.
Highest potential overdraft limit, but NOT guaranteed
Never EVER go over the interest-free limit or you’ll be stung with rates up to 24.2% AER plus a monthly fee of £28, and additional fees up to £20. Please let us know about your experiences in getting the overdraft.
HSBC- £3,000 0% overdraft
- In-credit interest: 2% AER
- Arranged overdraft: Can only borrow up to £3k
- Unarranged overdraft fees: return fees of up to £15.
- 0% overdraft: All years: £500 initially, Up to £3,000 (not guaranteed)
The HSBC account also shouts loudly about a maximum interest-free overdraft up to £3,000. You must then ask for further increases yourself. The feedback from last year tells us it’s often only up to £1,000 by the end of year one.
If accepted, you’ll initially get just £500,. You must then request further increases, but you won’t be guaranteed to get the full amount. We welcome your feedback, detailing if you were accepted and the overdraft limit you were offered.
Also, as an added bonus, the account pays 2% interest on the first £1,000 credited, but only in your first year of study.
Barclays – £2,000 0% overdraft
- In-credit interest: 0% AER
- Arranged overdraft: Can only borrow up to £3k. 8.9% interest over 2k
- Unarranged overdraft fees: return fees of up to £22.
- 0% overdraft: All years: £2k initially, Up to £2k (not guaranteed)
The Barclays account has a maximum interest-free overdraft up to £2,000.The account comes with a contactless card which allows you to make quick payments under £20.
You must then request increases, but you won’t be guaranteed to get the full amount. We welcome your feedback, detailing if you were accepted and the overdraft limit you were offered.
Natwest – £1,500 0% overdraft
- In-credit interest: None
- Arranged overdraft cost: 9.9% EAR.
- Unarranged overdraft fees: 0% EAR plus £6 unpaid item fee (max £60 per charging period).
- 0% overdraft: Year one: £1,000 Year two: £1,250 Year three: £1,500
The Natwest account boosts a guaranteed overdraft if you use the account regularly . Successful applicants are allowed a £1,000 0% overdraft in year one, £1,250 in the second year and £1,500 in the third. The account also comes with a free student discount card and £100 off ASUS laptop.
GUARANTEED 0% overdraft
The overdraft limit is guaranteed as long as you keep the account as your main account and pay at least £750 every 6 months and make at least 3 debit card transactions a month.
RBS – £1,500 0% overdraft
- In-credit interest: None
- Arranged overdraft cost: 9.9% EAR.
- Unarranged overdraft fees: 0% EAR plus £6 unpaid item fee (max £60 per charging period).
- 0% overdraft: Year one: £1,000 Year two: £1,250 Year three: £1,500
The RBS account boosts a guaranteed overdraft if you use the account regularly . Successful applicants are allowed a £1,000 0% overdraft in year one, £1,250 in the second year and £1,500 in the third. The account also offers 25% off some gigs and £100 off ASUS laptop.
GUARANTEED 0% overdraft
The overdraft limit is guaranteed as long as you keep the account as your main account and pay at least £750 every 6 months and make at least 3 debit card transactions a month.