Nationwide launches student current account with overdraft up to £3,000
Britain's biggest building society has launched its first student current account for those going to university.
The FlexStudent account from Nationwide Building Society includes an interest-free and fee-free overdraft of up to £3,000 and pays a 1% variable rate of interest on credit balances up to £1,000.
The maximum available overdraft limit in the first year of study is £1,000, while in the second year it is £2,000 and from the third year it is £3,000.
The account, which launches on Thursday, is available to anyone aged 18 and above on a full-time Ucas university course.
Nationwide said it is the first time it has offered a student current account.
Customers must pay in at least £1,500 per year of study across two or more transactions and maintain a good credit record to stay eligible for the account features.
The account also comes with other perks, such as the chance to win one of five £15,000 prizes to share with their parents as well as cashback offers.
Rachel Springall, a spokeswoman for financial website Moneyfacts, said: "Its fantastic news to see a new student account launch on to an otherwise stagnated market, and it's perfect timing for students comparing deals.
"The FlexStudent offers a highly appealing interest-free and fee-free overdraft spread across the years to reach a limit of £3,000, but its starting facility in the first year is just £1,000. It's worth keeping in mind that students should do everything in their power to use it sparingly and do their best to earn additional income to reduce what they owe."
Looking at how the deal shapes up against similar accounts offered by banks, Ms Springall said: "Santander currently offers a much higher interest rate of 3% and it offers a railcard."
She said HSBC and Halifax will also offer the full £3,000 overdraft limit up-front - but the Nationwide deal, which only allows people to increase their overdraft limit in stages, "can be a much more sensible option for some".
Ms Springall added: "The chance to win £15,000 will sound very tempting, but it's worth remembering that some perks don't really give much value to the longevity of the account."