So you’ve finally finished high school and gearing up for next-level education that is acquiring a college degree. Time to start with your adulting 101 as well. What better way to practice this than to begin with opening your own bank account. It may seem daunting, especially to a young student like you. However, you will realize that it is not only quite easy, but it is also very useful, which can make handling of your finances much more manageable.
I am hoping that this article will enlighten you about student bank accounts and why they are important during your crucial college years.
What is a student bank account
But first, what is a student bank account? Is it any different from other regular “adult” accounts? How will I gain from it as a struggling student?
It’s great to know that young as you are, you can apply for your own bank account that is suited to your needs, and with extra perks to boot. As the name suggests, such account is catered to students that allows you to have access to funds as you go through your college life. There are books that you need to buy and miscellaneous fees to pay.
When you have your own bank account, you can withdraw money from ATMs that are practically everywhere. Actually, this starter account can be very basic yet it offers several accommodations such as a higher overdraft limit, special discounts and services, post-graduate assistance, among others.
How you can benefit from having your own account
Paying for tuition and all other fees that come with studying in a UK university can be cumbersome financially. It gets even more complicated based on your status in the country. An international student could use this facility without having to resort to banks and typical wire transfers that charge an arm and a leg. Relying on family and friends to make it through college will require this tool so it will not add up to the stresses those“burning the midnight oil” times and hectic schedules will bring upon you.
Let’s not forget that studying in a foreign country or even if you are a UK resident as it is and living on your own, or have been out of the country for three years or more, will have additional expenses such as monthly rent, food allowance, and other miscellaneous fees. The amount you will save from those regular bank charges when you decide to open your student account will somehow help ease the burden.
An advantage that will be available for local residents, on the other hand, is the zero percent overdraft and higher overdraft that many banks offer with their student accounts. This is when you can withdraw from your account even when it has a zero balance. Essentially, it’s like you having a credit line with the bank. As such, you will have to establish a good credit rating in the process in order for you to enjoy this advantage.
The offer can get better with waived interest charges. It would mean that you can repay the amount within the agreed term which will depend on your bank provider. For example, there are banks that can allow anywhere from £1,000 to £1,500 during the first year which can increase to £3,000 by the third year. The zero interest would normally apply if you are able to repay the overdraft before your graduation after which, your account may be converted into a regular one. At this point then, it will be subjected to the bank’s applicable interest rates.
Unfortunately, though, the overdraft feature is not offered for foreign students for I would say, obvious reasons.
Your current options
There is quite a number of UK banks that offer student accounts, but not all of them can accommodate international students. Here are a number of the most common student bank accounts and their noteworthy perks.
Halifax Student Account
You can get as much as £1,500 overdraft that is free from any fees at 6 years max, or your college term plus an additional year after graduation. It enables you to access your account online and withdrawals, with credit balances earning 0.10 percent interest per year.
Nationwide FlexStudent Account
Higher education students can access an overdraft maximum of £3,000 on their third year, starting with £1,000 and £2,000 during the first and second years, respectively. You can also get £50 increments thereafter. Moreover, a minimum balance of £1,000 lets you earn 1% gross interest annually.
RBS Student Current Account
This type of account requires opening through their online facility only. This means there will be less hassle on the student as he just has to submit his requirements without having to go to the branch physically. Having an RBS Student Current Account will give you an option to apply for your own Student credit card, too. You also get to avail of its overdraft facility at no interest.
Lloyds Student Account
Aside from the popular features like online access, cash withdrawals, interest-free overdraft, etc., this student account has a cashback incentive of up to 15 percent when used to pay at specific stores and restaurants. You are also provided with a contactless card to make paying for transport and buying at shops a lot easier and safer.
Natwest Student Account
Aside from local student residents, Natwest can extend this option to international students as well. Both local and foreign are entitled to the same benefits, with some exceptions. One is of course,the overdraft facility, which is only available to UK residents who have stayed in the country for at least 3 years. Foreign students will also have no access to a contactless card and will have to shell out £10 monthly for account maintenance. Nevertheless, it comes with sweet perks such as a National Express Coach card, a Taste card, and an Amazon Prime subscription.
Santander 1\2\3 Student Current Account
It will take just 10 minutes to open this account whether you do it online or in person. It comes with attractive discounts when used to pay for train and shop at partner stores. Freebies include a railcard that’s valid for 4 years. A minimum credit balance of £300 can already earn you a decent interest rate, which is a plus.
HSBC Student Current Account
This HSBC account is available to both local and foreign UK students who have stayed in the UK for at least 3 years. The overdraft option can be maxed at £3,000 on your third year, while the account will be converted into a regular one should there be negative balances after graduation. It also comes with a student credit card that has a maximum credit limit of £500. And when you maintain at least £50 in your account for 12 months, you will earn 3% interest rate as a bonus.
TSB Student Bank Account
When you open a TSB Student account, you will have a Visa debit card as well as a Student Credit card, both of which will come in handy during those days that you need to cover payment for college expenses. While it can be used to send international payments, it comes with a less than fair exchange rate in spite of the bank’s claim of offering industry standard rates.
Barclays Student Account
This is great for those who would want to open an account from a reputable and recognizable bank worldwide. UK students can already get a £500 overdraft from the get-go and comes with a personalized card. The outright overdraft is offered as soon as you open the student account, which entitles you to a maximum of £3,000 on your third year for as long as you keep your loans updated.
TransferWise borderless account
This borderless alternative option is designed with the needs of not only international students, but also digital nomads, and travellers in mind. It is a bank account which can process over forty currencies at low rates. It simply uses Google exchange rate info when converting international currencies, no markup whatsoever. Instead, a reasonable upfront fee will be charged. It makes for better management of finances for those with frequent transfers from outside the UK.
How to open an account
Although there are no streamlined procedures on opening student accounts across banks, the process can be pretty straightforward for the most part.
It can get as fast as under 10 minutes for you to open a bank account online such as NatWest Student Account. While it accepts online applications, Lloyds Bank will still require you to visit their branch to present your original documents. These include a valid ID like your passport, or driver’s license, billing statements that prove your residence address, and your UCAS code or university offer letter.
If you are an international student, it is highly recommended that you already have a bank in mind even if you have yet to set foot in the UK. If possible, you can begin your online application prior to your arrival but only if you have arranged the place you will be residing at first.
Which account should I open?
As you may have realized at this point, not all banks that offer student accounts can accommodate international students. In reality, local student residents get the better end of the stick when we’re talking overdraft facilities and fee waivers. However, it’s still good that international students are not doomed to eternity because they still have access to their funds using the current options, especially the Transferwise borderless account which can receive payments from overseas without the crippling charges.
No matter what type of student you are as far as your UK residency is concerned, the account you will consider will definitely depend on your needs and what will provide you with the best deal like most other things. If you are the type that relies on your debit card to purchase your personal items at partner merchants, choose the one that earns you a cashback, to get more bang for your buck.
When you want to build up your savings, opt for a student account that offers a higher interest rate. And it’s always nice to have freebies along the way which you will actually use. Having a higher overdraft limit might be ideal for most but make sure you do not exceed the maximum because you will be subject to penalties as a result.
Ultimately, you should not be swayed based on just incentives that the bank offers because you might not be able to make the most out of your student account. After all, such deals may change anytime, leaving you with not much benefit in the long run.
Furthermore, I have mentioned earlier that you will lose your student account status after you finish your degree. So it’s best to manage your finances from the start so that when you reach the end, you will not suffer from high-interest rates for unpaid overdraft balances. Choose and spend consciously.