National Student Money Week: the best student bank accounts

graduateWith 450,000 students set to head off to university later this year, we've highlighted the top bank accounts specifically for students.

One of the first things students need to do to get their financial life started is to compare student bank accounts before choosing the ideal account to suit their own, personal needs.%VIRTUAL-SkimlinksPromo%

Given that most students will spend much of their degree courses 'in the red', the first thing to look for in a student bank account is a generous interest-free overdraft. The best accounts offer fee-free, interest-free overdrafts of up to £3,000. However, this upper limit usually applies only to year three, so it starts off lower and then rises with each academic year.

Also, you must understand that you may not get the maximum overdraft advertised, as your individual limit will be based on your credit score. However, some banks do guarantee to give you this upper limit, so always check whether the overdraft limit on offer with the student bank account is 'guaranteed' or only 'up to'.

In addition, don't be tempted to exceed your overdraft limit without permission. Remember, it's a limit, not a target – and you must pay back all this borrowed money one day. If you do go overdrawn without permission, then you could be charged sky-high rates of interest, plus painful penalties of up to £30 per transaction on top.

After 0% overdrafts, the next features to consider are credit interest rates (how much you'll be paid when your balance is above zero) and freebies, gifts and other incentives. Also, convenience does play a part, with many students signing up to banks which have branches or cash dispensers on campus.

The latest student deals
All of the UK's leading banks have now released details of their student bank accounts. Here's what's on offer to students today (banks listed in A-Z order):

Account

Credit

interest

0%

overdraft

Authorised

overdraft

Incentives

Bank of

Scotland

Student

None

Year 1 - up to £1,500 (tiered)

Year 2 - up to £1,500

Year 3 - up to £1,500

Year 4 - up to £2,000

Year 5+ - up to £2,000

8.21%,

plus £6 monthly

usage fee if £10

buffer exceeded

Barclays

Student

Additions

None

Year 1 – up to £2,000

Year 2 – up to £2,000

Year 3 – up to £2,000

Year 4 – up to £2,000

Year 5 – up to £2,000

8.9%

10% discount on student travel insurance.

Clydesdale

Bank

Student

Account

None

None

Year 1 – 7.49%

(up to £1,000)

Year 2 + -

7.49% (up to

£3,000)

Specialist advice service

First Trust Bank None Up to £1,850 N/A Commission-free foreign currency.

Halifax

Student

0.10%

Year 1 – up to £3,000 (£1,000 formal overdraft limit agreed at account opening)

Year 2 – up to £3,000

Year 3 – up to £3,000

Year 4 – up to £3,000

Year 5 – up to £3,000

7.2%

Discounts on breakdown cover and commission-free traveller's cheques and currency

HSBC

Student

Bank

Account

2.0% for first year (tracks base rate + 1.5%) on up to £1,000

Year 1 onwards - up to £3,000. £500 formal overdraft limit agreed at account opening.

N/A

Commission-free traveller's cheques and currency.

Lloyds TSB

Student

None

Year 1 - up to £1,500 (tiered)

Year 2 - up to £1,500

Year 3 - up to £1,500

Year 4 - up to £2,000

Year 5 - up to £2,000

Year 6 - up to £2,000

8.21%,

plus £6monthly

usage fee if £10

buffer exceeded

NatWest

Student

None

Year 1 – up to £1,000 (tiered)

Year 2 – up to £1,250

Year 3 – up to £1,500

Year 4 – up to £1,750

Year 5 – up to £2,000

N/A

Royal Bank

of Scotland

Student

Royalties

None

Year 1 – up to £1,000 (tiered)

Year 2 – up to £1,250

Year 3 – up to £1,500

Year 4 – up to £1,750

Year 5 – up to £2,000

N/A

Santander

Student

Current

Account

1% on up to £500

Year 1 - £1,500

Year 2 - £1,500

Year 3 - £1,500

Year 4 - £1,800

Year 5 - £2,000

N/A

Smile

Student

Account

None

Year 1 - £1,400

Year 2 - £1,700

Year 3 - £2,000

9.9%

The

Co-operative

Bank

Student

None

Year 1 - £1,400

Year 2 - £1,700

Year 3 - £2,000

9.9%

Yorkshire

Bank

Student

Account

None

None

Year 1 – 7.49% (up to £1,000)

Year 2 + - 7.49% (up to £3,000)

Specialist advice service

These deals could be altered at short notice.

Looking at this list, I can't see any really fantastic, stand-out deals on offer for students.

Nevertheless, you can see that some student accounts are better than others. For example, students should avoid Clydesdale Bank and Yorkshire Bank, as these don't offer interest-free overdrafts. Also, seven banks – Bank of Scotland, Barclays, Halifax, HSBC, Lloyds TSB, NatWest and RBS – only offer 'up to' maximum overdraft limits, so you may not qualify for these upper limits. Of these, HSBC and Halifax have the highest potential limit of £3,000.

Finally, signing up to one bank's student account does not mean that you have to stick with it for life. You can switch student accounts from one year to the next, as well as moving to a top graduate account once you've got your degree.
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