Student Bank Accounts & Free Overdrafts Student Bank Accounts by TheMoneyDoctor.TV

As thousands of new students prepare to start university this autumn, one of the first big decisions they’ll face isn’t about lectures or flatmates – it’s about money and opening a student bank account. They are unlike any other bank account and can offer some very appealing freebies and big financial boosts. So what are the best deals and what should you look out for?  

Student Bank Accounts & Free Overdrafts by TheMoneyDoctor.TV

Q: Why do banks make especially for students?

A: A student bank account is different from any other kind of account and it offers lots of freebie extras and most significantly an interest-free overdraft.

The banks are keen to get students on board in the hope and some expectation that they might stay with them for years afterwards - buying mortgages, insurance and credit cards from them.

Banking loyalty is nothing like as strong as it used to be, but the banks still think it is cheaper to get a new client by offering them some Deliveroo vouchers than trying to attract them years later with the best mortgage or savings accounts. So they see their student accounts as an investment and relatively cheap way of getting new clients.

A million people switched accounts in one year, according to the latest stats, but that still means most stayed where they were.

Q: What is the biggest thing that make student bank accounts so good?

A: Well the biggest financial attraction for many might be the interest-free overdraft. That means you have to pay back the money you borrowed but only the money you borrowed - they don't charge any interest.

While I am way too nervous to play the overdraft fox-trot - some might make use of tis unique offer to make a profit.

They could borrow the money at 0% interest and immediately put it in a savings account earning 4% interest. Nationwide offers a maximum student overdraft of £3,000. Which means you would earn £120 a year for doing not very much

Be careful however and remember that the 0% interest period only lasts a certain number of years after you graduate before interest charges set in. So if you are going to do this - make sure you can get the money out in time to pay the overdraft when it become due.

Q: There are also lots of freebies you see advertised - what sort of things are on offer?

There are quite a few which have noticed students desire for take-aways and are offering £40 Deliveroo vouchers. Others offer a TasteCard - which can save an average of £23 per meal every time you dine out with discounts at lots of food chains. The card normally costs around £30/year

Q: So what are the best student bank account offers?

A: Things change all the time - so make sure you check before you take out any account. But here are the latest deals I have seen.

Offers listed by SaveTheStudent are:

• NatWest offer an overdraft of up to £3,250 and £85 in cash and Tastecard

• Royal Bank of Scotland offers the same as NatWest

• Nationwide ofefrs an interest free overdraft of up to £3,000, £100 in cash and £90 Deliveroo vouchers

• Halifax offer an interest free overdraft of up to £2,000, £100 in cash and £90 in Deliveroo vouchers

• TSB offer an interest free overdraft of up to £1,500 but also offer 5% in credit interest up to £500

Q: Do all students qualify for a student bank account?

A: To qualify you'll need to be enrolled in a full-time undergraduate, postgraduate or higher apprenticeship course and you'll need to have lived in the UK for at least three years.

To prove you are a student you need to provide evidence such as your UCAS code or your University acceptance letter.

Q: What happens to your student bank account when you graduate?

A:According to Which? when you finish your studies, most banks will move your student account to a graduate account for two to three years. The main perk of a graduate account is that it extends your interest-free overdraft, giving you more time to pay off any debt you've built up. 

"If you’ve already cleared your overdraft, it’s worth looking at other current accounts that might suit you better. For example, you could choose one that offers a high-interest linked savings account, cashback on spending or a switching incentive."

Student Bank Accounts & Free Overdrafts by TheMoneyDoctor.TV