Moving away to university is a big step in many young adults' lives. With a long checklist of items to sort out before moving, a student bank account is often forgotten, especially if you already have an existing current account. If you’re not sure what a student bank account is or you’re wondering if it would suit your situation, then you’ve come to the right place. Here’s everything you need to know about student accounts.
What is a student bank account and is it right for me?
A student bank account is simply a current account designed to be used by people in higher education. It works the same way as a normal current account: you can pay money in, have your income or student loan paid into it, pay bills directly from the account and withdraw funds at your leisure. Student accounts differ from normal current accounts due to a number of perks provided to support students financially.
Short answer: No. A student bank account is not a necessity for every student. However, it can have many benefits that aren’t included with normal current accounts. The perks attached to a student account differ depending on the provider you choose, so do some research on what each bank offers.
Most student accounts offer interest-free overdrafts which last the duration of your time at university, with a grace period after graduation to give you a chance to pay it off before any interest is added on top. This can be beneficial for students who have little experience in money management. Moving away from home for the first time means you no longer have the safety net of living with your family, so careful planning is essential if you want to budget your money like a boss. Having an interest-free overdraft can ensure you’ve got access to cash in an emergency. Not all providers will offer 0% interest, however, the interest rate will almost always be lower than what’s offered with a standard account. Remember that the money in your overdraft isn't free and needs to be paid back, so an overdraft should only be used for emergencies or as a short-term solution.
It’s vital that you stay on top of your borrowing to ensure that you don’t graduate with large amounts left to repay with little income. Many banks that offer student current accounts have a dedicated team of student advisers, who are available to offer financial advice and support to the account holder. For students with little money management experience, this is a very beneficial perk over a standard current account, where this support is not offered.
Some banks offer extra perks such as free cash for meeting certain criteria, such as making a certain amount of payments from your student bank account or depositing a certain amount of money within a time period; once the conditions have been met, money is simply deposited into your account in a few working days.
Other perks provided by a variety of banks are exclusive discounts or free gifts. Some banks offer a free discount card with every student account that works with a variety of high-street brands, with others offering free railcards for the duration of your education.
Choosing the best student bank account
It’s important to remember that although freebies are a great perk, you shouldn’t base your decision solely on these.
If a provider is offering a discount card or a railcard with their student accounts, but the overdraft has a higher interest rate, you need to consider what is more beneficial for your personal situation. Perhaps you have little use for a railcard or rarely shop at the included providers of the discount card, but know you’d like the safety net that an overdraft offers.
Make a smart and informed decision for an account that will suitably see you through your years at university.
How to open a student bank account
Once you’ve looked into the student accounts offered by a range of providers and have selected the best deal for your circumstances, you can open your account.
The exact documentation required to set up a student account may differ slightly between banks. For most providers, you will need the usual proof of identity (driving licence or passport) and proof of address (utility bill or bank statement). Alongside this, you’ll need confirmation of your university place. This can be proven through an acceptance letter from the institution, or by using your UCAS code. If you are opening your account prior to starting your course and have received a conditional offer from the university, you will need to prove that you have received the required grades to meet the conditions.
Some banks offer an easy switch from a normal current account to a student one, so if you have an existing account with a bank and are satisfied with their student offerings, contact the bank to transfer your account quickly and easily. Confirmation of your university place will still be required in this instance.
Setting up your student account swiftly after receiving your university place confirmation allows you to begin reaping the benefits of the account before you start your studies!
Consult the reviews
Still unsure where to start? Check out our student current account reviews to see what others are saying about the providers. If you’ve already got a student account, consider leaving a review today to help others find the best deals.