Student Bank Accounts

All full-time UK students should be eligible. Unfortunately these are generally not offered to International students.

Before letting you open a student bank account the bank will assess your credit rating to determine whether or not to offer you an account. If you have a poor credit history you may have problems getting a student account with an overdraft. If this is the case you will have to open a basic bank account instead.

There are a number of factors to consider:

Most banks offer internet banking, allowing you to check your balance, transfer money and pay bills online. As a busy medic this will be useful and will save you time and effort.

There may also be times when you need to see somebody face to face. Therefore it is a good idea to have a branch that is easily accessible.

Overdraft

This is the biggest and most important factor. All student accounts offer overdrafts. Providing you stay within the agreed limit you will not have to pay interest. There are two things you should consider when deciding which is best:

How much is the overdraft for? Most offer a certain amount in the first year and then raise it every year. Find out how much you are likely to get each year.

Maximum Overdrafts on Student Accounts (August 2008)

All amounts shown are maximum amounts, meaning there is no guarantee that you will get them. Whether you can access the full overdraft will depend on your credit history and how you manage your account.

Many accounts will start with a much lower limit. For example, most students with a Halifax account start out with just a £500 overdraft although generally this is increased to the full amount by the end of the first year. Similarly Lloyds TSB give you £500 for the first six months, increasing it to £1,000 in months seven to nine, and then £1,500 after that . Barclays start you on a £200 overdraft limit and then increase it on request.

How long does it stay interest free? Some will last a few years beyond graduation, others will start charging you interest rapidly once you leave University. Most will stay interest free for one year. Check before applying.

It is important not to be swayed by the freebies, as other factors will impact on you more in the long run, such as the overdraft limit. However if you are stuck for choice between two banks then you could use this as the deciding factor.

Most banks offer similar deals and there is stiff competition between them.

The Royal Bank of Scotland offers a Travel Package, which includes a three-year 16-25 railcard (which cuts many UK rail fares by a third) plus one month's free bus travel in Edinburgh, Glasgow or Aberdeen. Also if you apply online you get a free webcam.

Natwest offers a free five-year 16-25 Railcard worth £120. The railcard will be renewed each year provided you’ve used the bank account within the previous three months.

A word of warning

Second to taking loans off family and friends, interest-free student overdrafts are the cheapest form of borrowing. However they are not ‘free money’. They will have to be paid back and will not remain interest-free forever. Use them wisely. For example, spend the overdraft through the year if you know you can work to pay it off during the summer break. Remember, you will probably need your overdraft at some point during your degree - make sure it is still there when you really need it!