Student accounts and finance


Got a place at college or university? Check out our guide on how to manage your finances independently, open a student bank account and make the most of the benefits banks offer to students.

Congratulations! You’ve worked hard, you’ve got the grades you needed, and now you’re off to a bright new future at college or university. Financially, however, the next few years are probably going to be pretty tight. You’ll need to pay for accommodation, food, books, clothes and journeys home. You’ll also need to have enough left over to enjoy your social life.

The earlier you start thinking about how you’re going to manage your budget, the easier it will be. This page is intended to help point you in the right direction and to give you some tips on how to make your money work as hard as you do.

What kind of things do I need to consider when opening a Student Bank Account?

Most major banks provide accounts that offer preferential terms, such as, an interest free overdraft. Some banks also offer incentives for students to take out accounts with them in the first place, like music vouchers or a card for rail travel. To qualify for a student account you need to be on a recognised course that lasts at least 12 months.

It may be sensible to open your student account before you go to university or college because if you wait until you are there, it is likely there will be long queues and that you will have to wait some time before you receive your cheque book and cash card. You can usually open your account at your local branch and they will set up your account in the branch closest to where you are going to be studying.

When opening a student bank account, you will need to –

  • Provide details to the bank on student status and funding.
  • Confirm to the bank that they are the main bank you deal with.
  • Remain within your agreed overdraft limit, or obtain the bank’s agreement to any overdraft increase in advance.
  • Let your bank know if your circumstances change.
  • Not maintain any other account upon which there are borrowing facilities.

There are so many banks. How do I decide where I should open my account?

The most important thing to look out for is good overdraft facilities and reasonable interest rates, as many students rely more heavily on overdrafts and credit cards. Freebies are all fair and well, but should be treated as the icing on the cake. The key is to think long term.

Other things you may wish to consider when shopping around include:-

  • What services are available with the student package? Do they include credit cards and possessions insurance?
  • What is the limit on your interest free overdraft?
  • Is there a fee for setting up the overdraft?
  • Is the overdraft automatically set up?
  • Will the bank increase your overdraft in an emergency if your student loan arrives late?
  • Does the account pay interest when it is in credit?
  • Does their credit card have an annual fee?
  • Do they offer graduate accounts, or do they extend their student account following graduation?

It is important to shop around – don’t automatically opt for the bank used by your parents, or the one that you used as a child.

What about Credit Cards?

Credit cards are plastic cards issued by the bank, which let you buy goods and services straight away and pay later, so it is really a short-term loan. Credit cards are a convenient way of paying for goods and services but if you don’t pay the bank in full within a certain time you will be charged interest on the amount you borrowed. You have to be very careful to keep track of your spending when using your credit card as you can run up a debt without realising it. Taking out a bank loan might be a cheaper way of borrowing money from the bank in the longer term.

The APR refers to Annual Percentage Rate. It is intended to give people a more accurate idea of how much they are being charged when they borrow money. Generally the lower the APR the less money you will have to pay back in interest.

It is important to make sure you compare the APR of different credit cards when deciding which credit card to take out.

Some card issuers may offer a low rate of interest for an initial period but this will increase at the end of this period.

If I have any debts, will I have to pay them all back as soon as I start work?

Banks will not expect you to repay all the money you have borrowed as soon as you start work. They know that there will be lots of demands on both your time and money and have therefore designed packages with the particular needs of graduates in mind.

What about Graduate Accounts?

Most of the banks which offer student accounts also offer a graduate package with a low interest or interest-free overdraft for up to three years following graduation.

Some banks continue to offer their student account for up to a year following graduation, while other banks offer dedicated graduate accounts.

You don’t need to have a student account with a bank to open a graduate account. You can also transfer to another bank even though you may be overdrawn. You would need to get the agreement of your new bank in advance.

What are the best ways of managing my money?

Speak to your student adviser early to plan your finances, and as soon as you are likely to encounter any difficulties.

Learn to budget. Spend what you have as wisely as possible:

  • Keep a record of what you spend.
  • Have a weekly budget and stick to it.
  • Keep a regular check on your bank account balance.
  • Pay important bills as soon as you can.
  • Avoid going over your overdraft limit without agreeing it first. Otherwise you will have to pay interest. If you need more money than you have arranged contact your bank to see if they can help.
  • Be careful not to overspend in your first year – your lump sum has to last a long time.

Saving tips

  • Live in university accommodation whenever possible.
  • Claim all available discounts using your NUS card.
  • Shop for food with friends – buying in bulk can save money.
  • Eat on campus rather than in bars and restaurants.
  • Get a part-time job – as long as it doesn’t interfere with your studies.
  • Buy your course books second-hand.

What if I run into difficulties and can’t manage?

Let your bank know as soon as possible. They may be able to help.
If you are in severe financial difficulty you can apply for Access Funds and hardship loans. Check with your college for more details.
You can get free confidential professional money advice from the National Debtline on 0808 808 4000 or from the Consumer Credit Counselling Service on 0800 138 1111.