COMMENT
The Best Student Bank Accounts

By Alison Hunt (TMFAlly)
August 11, 2005

Exam results are due out at any moment, some may already have received theirs and along with the excitement of confirming a place on the desired course, prospective freshers will need to open a student bank account. Of course, you could try to get by with the bank account you currently have, but anyone who's ever been a student will tell you that a specialist student account is well worth having, simply because it will afford you privileges that you would normally have to pay for.

So how do you choose the account that's best for you? The big banks are, as usual, doing everything they can to try to bribe new students, offering free MP3 players, free CDs, 5 year Young Person's Railcards, discount vouchers, or even cold, hard cash. After all, today's penniless students are tomorrow's big earners. But are all student accounts virtually the same, distinguishable only by their individual freebies?

No, no, no! All accounts are not the same and in my opinion, you should totally ignore the goodies being given away and concentrate on the details of the account, instead. According to a recent survey from NatWest, students starting a three year degree course can expect to graduate with around £13,680 worth of debt. Unless you're from an extremely wealthy family you'll probably find these sums of money quite frightening, and even after taking into account any savings, parental help and holiday job earnings you will probably need a bit of financial assistance. And although student loans are a cheap way to borrow, a sensibly managed, interest-free overdraft will let you borrow some cash for free. So forget the gifts, check out the overdrafts!

If you will have access to a computer, internet banking makes branch location less important. However, do not rule out ever having to enter a branch in the duration of your course as you will probably need to face student advisers every now and then to increase overdraft limits etc. And having a branch that's relatively convenient will make this less of a chore. Take a quick look at your University/College's website or check out the information pack it will send you; it should list the banks and facilities available and the banks themselves have branch locators on their websites. The National Union of Students (NUS) website may prove useful, too.

And if you're embarking on a longer degree (such as medicine or architecture) you should ensure that you choose an account that caters for this, too, preferably increasing overdraft limits each year for four years or more, rather than three. After all, you may not need to use your free overdraft, but its nice to know it's there should you need it. And always remember, should you near your overdraft limit you must make sure you speak to your bank quickly to avoid being charged rip-off unauthorised overdraft fees.

So what is on offer in 2005/6? We've compiled some of the accounts available.

Student Accounts 2005/6

Bank	Interest Free Overdraft Maximum (listed for years 1 and 4)	Interest	Online banking	Freebies
Halifax/Bank of Scotland	Y1 £1750 Y4 £2,100	2.53% AER	Yes	None
Royal Bank of Scotland	Y1 £1,250 Y4 £1,800	2% AER	Yes	Discount vouchers
NatWest	Y1 £1,250 Y4 £1,800	0.1% AER	Yes	5 year Young Person's railcard for first years
Ulster Bank (NI)	Y1 £1,250 Y4 £1,800		Yes	None
Cooperative Bank/ Smile	Y1 £1,000 Y4 £2,000	3.04% AER (Smile)	Yes	None
Lloyds TSB	Y1 £1,000 Y4 £2,000	0.1% AER	Yes	TBC
Abbey	Y1 £1,000 Y4 £1,800	1.5% AER	Yes	£20 if Abbey customer already and account is transferred
Barclays	Y1 £1,000 Y4 £1,750	0.1% AER	Yes	Free National Express coach card, mobile phone insurance, discount vouchers
HSBC	Y1 £1,000 Y4 £1,750	0.1% AER	Yes	Free MP3 player/10 CDs/ £50 cash if you apply online before 8/10/05
Yorkshire/Clydesdale Bank	None	3.1% AER Yorkshire; 3.5% Clydesdale	Yes	None

Source: Moneyfacts

As you can see there are quite a few differences between the offerings from each account. It's also worth taking a closer look at the accounts that interest you on their bank's individual websites as the overdraft limits tend to increase steadily each year and you'll need to know by how much. Remember, the interest free overdraft limits given here are at the top end of what's available and must usually be agreed with your bank on an individual basis - you may find you won't qualify for the full amount. And we've included the freebies available just for information but don't be swayed by them!

So, check out the accounts on offer this year and narrow them down to the ones that suit your needs. And this isn't simply aimed at freshers - older students unhappy with their current bank account should check out the alternatives and move if necessary. However, don't think that you can open up as many student accounts as you like simply to claim the benefits - the banks are wise to this and will prevent you from doing so.

And unless you're pretty sure that opening an account with the bank in question at Freshers' Fair will be suitable, open your account before you leave for uni. There will be hundreds of people opening accounts during Freshers' week, do you really want to waste your time queuing behind them?