The best student bank accounts

If you have a family member who is heading off to university, it’s worth checking out the best student bank accounts to help manage your finances. 

Every year, banks roll out the red carpet for youngsters pursuing higher education, enticing them with free railcards, cashback, retail offers, food discounts and attractive overdraft options. 

While these perks are a welcome bonus, make sure that the account you choose improves boosts savings and reduces university costs. At a time when the cost of living is already making a dent in student budgets, it’s important to make the most of every opportunity and cut wherever possible.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

We’ve rounded up the best student accounts to get you started. 

The best student bank accounts

NatWest Student

The NatWest Student bank account is a great option for foodies and is one of the best deals on the market right now. 

It comes with a 0% overdraft, £100 for opening your account and a free four-year Tastecard – a saving of £220. On top of that, you can get 50% off your food bill at thousands of UK restaurants, exclusive discounts on cinemas, attractions and a lot more. 

You start off with a £500 interest-free overdraft in your first year, rising to £2,000 in years two and three.  

Santander Edge Student

Heading to university far from home? The Santander Edge Student current account is an attractive option as it gives you a free four-year railcard. You get a third off rail tickets, which can save you hundreds of pounds over the course of your studies. On top of that, you’ll receive an interest-free £1,500 overdraft for three years, as long as you pay in at least £500 a term. The overdraft rises to £1,800 in year four and £2,000 in year five.

One of the biggest offers coming from Santander is its prize draw, which sees 20 students winning up to three years’ worth of tuition fees. All they have to do is pay in £500 before 30 September to be entered into the draw. So 20 students could each win £27,750, and a further 30 will win £9,250 each. 

Customers can also sign up for Santander Boosts to receive cashback, vouchers and prize draws from retailers including Greggs, The Body Shop, Adidas, Decathlon and Tesco. 

Rachel Springall, finance expert at Moneyfactscompare.co.uk. said, “Along with the interest-free overdraft of £1,500 in years one to three, the Edge Student Account could be an attractive choice overall.”

Nationwide FlexStudent

The Nationwide FlexStudent bank account gives you a guaranteed 0% overdraft with £1,000 in your first year. You can then ask to increase the overdraft limit to £2,000 in your second year and £3,000 in the third. You'll need to pay in at least £500 each term, keep up with any bill payments, maintain a good credit record and stay within your arranged overdraft limit.

To sweeten the deal, you can also get £100 free cash and £120 worth of Just Eat vouchers (£10 every month for a year).

HSBC Student

HSBC’s student account offers a £1,000 interest-free overdraft in the first year and then, depending on your credit record, you can apply to increase it to £2,000 in year two and £3,000 in year three.

Beyond the attractive overdraft arrangement, you can access its 5% regular savings account. However, there are better alternatives if you want to deposit small sums of money into a savings account and earn more attractive returns of up to 8%. 

Lloyds Bank Student Current Account

With Lloyds Bank’s student current account, you can get free £110 cash if you open a new account and pay in a minimum of £500 between 1 August and 31 October. You also get a 20% discount on selected Student Union events during the academic year, which includes live music, club nights and talks across universities in England and Wales. 

The account gives you an arranged overdraft of £1,500 overdraft for years 1-3, and then up to £2,000 in years 4-6. You also get 2% interest on balances up to £5,000 and up to 15% cashback at certain retailers. 

Other accounts to consider 

 While the accounts we’ve mentioned so far are best for maximising interest-free overdrafts and getting freebies on the side, there are a few more that are worth considering. Here’s a rundown of what other major banks are offering.

Bank of Scotland: Interest-free overdraft for up to £1,500 for years 1-3 and up to £2,000 for years 4-6. You also receive up to 15% cashback at some retailers, and it lets you ‘Save the Change’ by rounding up your transactions to the nearest pound and putting the difference in a nominated savings account. 

Halifax: £1,500 overdraft for years 1-3 and up to 15% cashback at some retailers.

TSB: £1,500 overdraft for years 1-3, 5% interest on balances up to £500

Barclays: Interest-free overdraft of up to £1,500. You also get a free 12-month subscription to Perlego, which describes itself as a digital library that gives you access to academic books. It’s worth up to £653. 

Prioritise your overdraft  

The perks offered to students range from free cash to railcards but don’t be swayed by the freebies. The account needs to work well during university and beyond, so the main thing to consider is how much of an overdraft you’ll need and how long you will need it to be interest-free. 

Student bank accounts offer much larger than normal free overdraft facilities to help students through their expensive university years. 

Springall says, “Money management is a key life skill, and for some students, this will be the first time they have been away from home, which can be daunting. A generous interest-free overdraft could be a lifeline for some students, but it is worth noting that this must be paid back when they finish their studies. If this is a worrying thought, then it’s essential students seek support to improve their mindset and financial situation.”