Student accounts offer great incentives such as low overdrafts, money off rail or coach travel, or interest.
What are student bank accounts?
In many respects, student bank accounts are similar to other types of bank accounts, except that they are only available to people in higher education, and they tend to offer all kinds of extra benefits and features.
The reasons banks offer extra benefits and features to students are two-fold. Firstly, people in the UK rarely switch their bank account, so once they have you as a customer, they are expecting to keep your business for a long time. Secondly, graduates tend to earn more than those without degrees. High earnings mean more opportunity for the banks to make money from you. Ergo, it makes great business sense to get students to start banking with them.
What features and benefits do student accounts offer?
Different banks and building societies offer different features and benefits, and, competition is pretty aggressive, so these can be very generous.
Discounted rail/coach travel
Gift cards for popular retailers
Who can get a student account?
Every student account has slightly different eligibility criteria, but, by and large, if you are on a full-time undergraduate course you will be accepted. There are of course circumstances where you might be declined, if you fail a credit check for example, or you are an international student, and you apply for a standard account, but there are normally alternative options if this happens.
Using your student account wisely
Being a student used to be associated with bad food, parties and skiving; today student life is associated with debt. Expensive tuition fees, high accommodation costs, high inner-city food prices, all make it harder to make ends meet. A high overdraft at 0% is therefore a very tempting source of money. If you use it in year one, you might not have to pay it back until three or four years later, when you're bound to have more money. Unfortunately, this is rarely the case, with debt mounting up quickly (even without interest). Soon you're at your overdraft limit, and you’re still living hand to mouth. In time you finish your course, and quickly discover your cheap overdraft debt has become a de facto 'high-interest loan'. With this in mind, try, however you can, to avoid using your overdraft, or keep your borrowing to amounts you know you can quickly pay back - your future self will thank you.