25 Apr 2024

Student finance

In a few month’s time, many students will be preparing to leave home and head off to university. For many it will be the first time they are fully in charge of their finances, with budgeting and bill paying becoming a necessary evil.

Many students leave university with five figure debts, so, it’s worth them putting in some time and effort to finding the most suitable student account for their needs.

Michelle Slade, spokesperson for Moneyfacts.co.uk, commented:

“As most students spend their university life living in their overdraft, it is worth finding an account that offers a good level interest free.

“Inevitably, many will require more than this limit, so it is also important to check the authorised overdraft that will be payable on any additional borrowing.

“Halifax continues to offer the highest level of interest free overdraft of up to £3,000 from year one.

“Many other accounts offer a tiered system, with the level of interest free borrowing increasing each year and the high level only available in years four or five.

“It is also worth bearing in mind that some of the higher overdraft limits are quoted as ‘up to’. The level of overdraft offered will be credit scored and if you don’t fully match up to their criteria, you may be offered a lower limit.

“Many banks offer incentives to students to try and tempt them into taking their account, but these should be a perk and not the reason for selecting the account. While discounts offers and cinema tickets may seem tempting, you may end up paying for them twice over with a higher overdraft rate.

“While borrowing on a credit card may seem tempting, students should treat this with caution. Although limits offered to students are small, if you have no regular income to repay the debt then even a few hundred pounds can soon escalate as interest charges mount up.

“Many students will receive their grants as a lump sum at the start of each semester. It is worth setting yourself a weekly budget to ensure that you continue to have money to live on throughout the term.

“If you do get into trouble with your finances, don’t bury your head in the sand. Unauthorised borrowing can be very expensive and soon mount up. If you tackle any issue head on, the bank will be more lenient and willing to help.

“Many branches at or near universities also offer a specialist advice service, which can be invaluable in helping you manage your money.

Provider	Account	Credit Interest	Interest Free Overdraft	Authorised Overdraft	Incentives
Abbey	The Abbey Account (Student)	1.98%	Year 1 - £1,000 Year 2 - £1,250 Year 3 - £1,500 Year 4 - £1,800 Year 5+ £2,000	9.9%
Barclays Bank	Student Additions	Nil	Year 1 – up to £2,000 Year 2 – up to £2,000 Year 3 – up to £2,000 Year 4 – up to £2,000 Year 5 – up to £2,000	8.9%	Specialist advice service and mobile broadband offer
Clydesdale Bank	Student Account	Nil	None	Year 1 – 7.49% (up to £1,000) Year 2 + - 7.49% (up to £3,000)	Commission free travellers cheques and currency
The Co-operative Bank	Student	Nil	Year 1 - £1,400 Year 2 - £1,700 Year 3 - £2,000	9.9%
HSBC	Student Bank Account	1.98% for first year	Year 1 – up to £1,000 Year 2 – up to £1,250 Year 3 – up to £1,500 Year 4 – up to £1,750 Year 5 – up to £2,000	3.00% above base rate	Discounts on mobiles, computer equipment and entertainment, specialist advice service and travel insurance
Halifax	Student	0.10%	Year 1 – up to £3,000 Year 2 – up to £3,000 Year 3 – up to £3,000 Year 4 – up to £3,000 Year 5 – up to £3,000	7.2%	Breakdown cover and commission free travellers cheques and currency
Lloyds TSB	Student	0.10%	Year 1 - £1,500 Year 2 - £1,500 Year 3 - £1,500 Year 4 - £2,000 Year 5 - £2,000 Year 6 - £2,000	8.2%	Specialist advice service, breakdown cover, discounts on mobiles and music downloads and commission free travellers cheques and currency.
NatWest	Student	0.10%	Year 1 – up to £1,250 Year 2 – up to £1,400 Year 3 – up to £1,600 Year 4 – up to £1,800 Year 5 – up to £2,000	N/A	Discounts on broadband, laptops and shopping, five year rail card and specialist advice service
Royal Bank of Scotland	Student Royalties	1.02%	Year 1 – up to £2,750 Year 2 – up to £2,750 Year 3 – up to £2,750 Year 4 – up to £2,750 Year 5 – up to £2,750	N/A	Discounts on broadband, laptops, holidays and entertainment and three year rail card and USB stick
Smile	Student Account	0.12%	Year 1 - £1,000 Year 2 - £1,400 Year 3 - £1,800 Year 4 - £2,000	9.9%
Yorkshire Bank	Student Account	Nil	None	Year 1 – 7.49% (up to £1,000) Year 2 + - 7.49% (up to £3,000)	Commission free travellers cheques and currency
Source: Moneyfacts.co.uk 27.7.09

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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