Before anyone can set off from their home town and into fresher’s week, there is some important business every student needs to take care of – opening a student bank account. Some of the major benefits of student bank accounts are the great deals and rates that are usually on offer – but most importantly the interest free overdraft.

More often than not, the thing that defines a student bank account from any other high street current account is the interest free overdraft. The student market is a highly competitive one for banks so students will have offers thrown at them from left, right and centre. It is essential that students do not get side-tracked by the goodies on offer such as free cinema tickets and stay focused on obtaining that vital interest-free overdraft.

Opening a student bank account

The first thing to be aware of when looking for student bank accounts is that you are only allowed one student account from any bank. When applying for an account, students will need to provide proof of a university placement for the upcoming year and agree to have their student loans paid into that account.

Interest free overdraft

This is the staple of any student bank account and should be used wisely. Standard current accounts do offer arranged overdrafts but users have to pay a small fortune to go into the red with some banks charging £1 a day for doing so. Most student banks accounts have this free overdraft facility as standard, with the credit limit reaching up to around £3,000 for the final year of a three-year degree. It’s also important to note that banks often use “up to” in their advertising campaigns, meaning that they might carry out a credit check and offer you a lower overdraft limit.

Interest free overdrafts allow you to borrow money very cheaply but it is important to remain aware that you will be required to pay back the overdraft after completing your course, often within 12-24 months (most student accounts turn into graduate accounts after graduation and the overdraft amount drops incrementally year-on-year). If you are unable to get your account into the reduced overdraft limit in the time given, you could end up paying a lot of interest on a large overdraft.

Charges

As a student, you have a wealth of financial options open to you but the banks generosity has to end somewhere, and that somewhere is often bank charges. If you go into an unarranged overdraft, have a direct debit rejected or insufficient funds for a payment, you will more than likely be charged. This is the same as with all standard current accounts, and these charges could be up to £35 a time so it is vital that you are fully aware of them and avoid getting yourself into that situation.

Branch location

If you are at a campus university, you could be a long way away from a large town or city, meaning that if there isn’t a branch on campus you might struggle to get to get to one. Before selecting a student account, check their branch locator to find if there is a branch on your university campus or anywhere nearby.

Customer service

It’s very easy to get carried away with all the great things the banks are throwing in your direction, but students need to remember that they are still customers. Once the initial period is over and you are dealing with the bank on a day-to-day basis, you will want to be treated properly and speak to someone who can help you. Check out reviews of the local branches and find out if the bank you are interested in is highly recommended for students.

Compare bank accounts

Most student bank accounts do offer an interest free overdraft facility. While this is the most important thing to get your hands on before you start University, there could be other offers available and better rates on the table. Before deciding which account to go for, ensure that you thoroughly compare bank accounts using online tools and tables. Some other things you might want to consider when you compare bank accounts are any monthly or annual fees, overdraft limits and the savings interest rate.