The Best Student Bank Account

Posted on: 14 August 2008 by Gareth Hargreaves

What features to look for in a bank account when starting university.


As autumn approaches, many teenagers and parents are gearing up for the start of university, and plenty of banks are hoping to secure the student pound by offering tempting gimmicks.

Over a quarter of people stick with one bank throughout their working life, so banks are keen to catch people at an early age. While such enticements are seductive, they can often detract from the core features. Freshers should look beyond flashy giveaways and headline rates and scrutinise the interest rates available and the potential size of interest-free overdrafts.

In a lot of cases, the overdraft element will prove to be far more relevant for students. In general, overdraft limits are increased year by year, although the latest Halifax/Bank Of Scotland account can offer up to £3,000 from day one.

Students need to remember the golden rule though - that overdrafts will need to be paid back at some stage. It's not free money, it's a loan.

The four questions a student should ask are:

  • What interest-free overdraft can I get?
  • What other charges might I be subjected to?
  • Is there a branch nearby?
  • And finally - what are the freebies?

The new Abbey student account offers £50 cashback and in-credit interest of four per cent for the first £500, while HSBC has a good all-rounder with six per cent on balances of up to £1,000 and an interest-free overdraft of up to £2,000.

Many more products are likely to launch before the new term starts.

Student Current Accounts Compared

HSBC Student Service

  • Credit Interest Rate (AER) 6.00% (Up to £1,000 for 1st year at uni)
  • Maximum Interest Free Overdraft Limit £2,000 (Overdrafts are tiered: Yr 1 up to £1,000 Yr 2 up to £1,250 Yr 3 up to £1,500 Yr 4 up to £1,750 Yr 5 up to £2,000)
  • Unauthorised EAR 8.30%

Benefits:

  • Discounts off at CD WOW
  • Deals and savings with Dell
  • Specialist branches at selected campuses

Abbey Student Account

  • Credit Interest Rate (AER) 4.00% (up to £500)
  • Maximum Interest Free Overdraft Limit £2,000 (Overdrafts are tiered: Yr 1 up to £1,000 Yr 2 up to £1,250 Yr 3 up to £1,500 Yr 4 up to £1,800 Yr 5 up to £2,000)
  • Unauthorised EAR 28.70%

Benefits:

  • £50 cashback when account is opened

Halifax Student Current Account

  • Credit Interest Rate (AER) 2.02%
  • Maximum Interest Free Overdraft Limit £3,000
  • Unauthorised EAR 24.20%

Benefits:

  • 25% off AA membership
  • 20% discount on Card Care insurance
  • Commission free foreign currency and American Express Travellers Cheques
  • All Student benefits are available for 12 months after course ends

Royal Bank of Scotland Student Royalties

  • Credit Interest Rate (AER) 2.02%
  • Maximum Interest Free Overdraft Limit up to £2,750
  • Unauthorised EAR 29.84%

Benefits:

  • £100 off Asus Laptops
  • £50 broadband from 3 Mobile
  • RBS Payment Card Protection worth up to £20
  • 25% off gigs and shows
  • Free Numbers Vault worth up to £24 which keeps mobile numbers safe
  • 2-for-1 cinema tickets at Vue Cinemas
  • 10% off flights and holidays booked through Royalties membership services
  • Free Microsoft Webcam when the account is opened online

Lloyds TSB Student Account

  • Credit Interest Rate (AER) 0.10%
  • Maximum Interest Free Overdraft Limit £2,000 (Overdrafts are tiered: Yrs 1, 2 & 3 up to £1,500 Yr 4, 5 & 6 up to £2,000)
  • Unauthorised EAR 8.20%

Benefits:

  • Up to £100 cash - £20 when university place is confirmed in August and up to £80 when up to four friends are recommended by 15th September 2008 and they pay in at least £200 or their student loan by 31st October 2008
  • Instant £200 interest free overdraft
  • Free NUS Extra Card
  • Commission free travel money and non-sterling American Express Travellers Cheques
  • Free YHA membership for a year
  • 35 free music downloads from eMusic
  • Free text alerts, Internet and Telephone Banking

Barclays Student Additions

  • Credit Interest Rate (AER) 0.10%
  • Maximum Interest Free Overdraft Limit £2,000 (Overdrafts are tiered: Yr 1 up to £1,000 Yr 2 up to £1,250 Yr 3 up to £1,500 Yr 4 up to £1,750 Yr 5 up to £2,000)
  • Unauthorised EAR 27.50%

Benefits:

  • 6 free cinema tickets - one free ticket per month for 6 months
  • Interest free overdraft limit of £200 on account opening
  • Mobile banking
  • Mobile Phone top ups available at Barclays ATM's

NatWest Student Account

  • Credit Interest Rate (AER) 0.10%
  • Maximum Interest Free Overdraft Limit £2,000 (Overdrafts are tiered: Yr 1 up to £1,250 Yr 2 up to £1,400 Yr 3 up to £1,600 Yr 4 up to £1,800 Yr 5 up to £2,000)
  • Unauthorised EAR 17.81%

Benefits:

  • Free 5 year 16-25 Railcard worth £125
  • Money off Shopping and Entertainment with the Railcard
  • £100 off Asus Laptops
  • £50 off mobile broadband with 3
  • Free LifeCam from Windows Live Messenger when account is opened online

Sourced by www.moneysupermarket.com 29th July 2008.

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