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How do Student Bank Accounts Work

By Lulu Meade

There’s a lot to think about when heading off to university- booking freshers tickets, buying textbooks, stocking up on pot noodles… and getting a student bank account. Whilst slightly less MSG-filled, a student bank account can help save you big bucks and even bag you a few freebies!

What is a student bank account?

A student bank account works pretty similarly to your usual banking set up but with a few little benefits. The main (and potentially dangerous) perk is an interest-free overdraft. The size of that overdraft will vary depending on what bank you’re with, but whatever value that is equates to money you can borrow from the bank free of charge. This is a great and often essential tool for most students whose loan instalments don’t cover the cost of rent, food, textbooks (and a social life!) but it is imperative you keep an eye on your spending. If you spend more than your overdraft allows, you may be charged, and if you do so without noticing, that can rack up.

There are plenty of accounts to choose from, most major banks offer student accounts with an interest-free overdraft and some come with other freebies too. These perks are often balanced out by the size of the overdraft so bare that in mind- if you know you’re going to be relying on your overdraft regularly between loan drops, opt for the largest overdraft offered. Equally, if you know you’re going to be getting the train home a lot, maybe that free 16-25 railcard is enough to buy your business!

What happens if I exceed the overdraft limit?


Remember, an overdraft is just another term for a loan. You are borrowing and spending money you don’t have. For a lot of people, there isn’t much choice in going into their overdraft as students on fixed incomes, but it could be worth considering the options of part-time work to ease the debt load. And it goes without saying- budget, budget, budget!

best student bank accounts

How to open a student bank account

Setting up a bank account isn’t as much of a pain as it sounds. You are going to need a few things to get started:

  • Proof of address (for more details of what documents can be used as proof of address, check out our dedicated post here)
  • Proof of ID
  • You’re going to need to prove you’re attending higher education. The majority of students will have conditional offers, which means you’ll need to wait until you get your results to open an account. Documentation that your place has been confirmed should be enough to get your account set up. If instead, you received an unconditional UCAS offer, then that confirmation letter may be used.

Another quick thing to remember- whenever you apply for a bank account with an overdraft, or any other debt product, you’re going to get a credit check.

Which bank account is best?

Sadly, we can’t tell you which account you should open. As I said before, there are loads out there, and which one is best for you will depend on your needs and personal circumstances. I can, however, give you some pointers on what to look out for.

What to look for on a student bank account:
  • The size of the overdraft: remember this is the amount of money you’re going to be able to borrow interest-free. With many accounts, the size of your overdraft will change over the three or four years you hold the account. Consider how much you’re going to be relying on borrowing money before choosing based on the size of the overdraft!
  • Unarranged overdraft fees: this is what you’ll be charged if you spend beyond your allotted overdraft limit. It’s worth going for an account that physically won’t let you do so but otherwise, opt for the lowest fee.
  • Freebies! If a bank is offering you something you’ll really use, like a National Railcard or NUS card, there could be real savings to be had from the discounts you’ll get. Again, this is going to depend on your lifestyle, but don’t disregard these little gems!

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