With 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.
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 Ireland UK||0.50%||Up to £2,000||N/A||10,000 return European flights available to new student account holders who use their account 10 times between 1 July and 31 October 2012.|
|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 £5 monthly usage fee if £10 buffer exceeded||Free NUS Extra card for three years, offering discounts at selected stores, commission-free foreign currency, £75 discount off a holiday booked with STA Travel|
|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 Possessions Insurance. 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 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 £5 monthly usage fee if £10 buffer exceeded||Free NUS Extra card for three years, offering discounts at selected stores, commission-free foreign currency, £75 discount off a holiday booked with STA Travel|
|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||Student discount card offering shopping discounts, plus free four-year 16-25 railcard for current NatWest account holders switching to student account|
|RBS 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||Student discount card offering shopping discounts, plus free four-year 16-25 railcard for current RBS account holders switching to student account (students studying in Scotland only)|
|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||£50 cashback for customers who open or switch between 1 July and 30 November 2012.|
|Smile Student Account||0.12%||Year 1 - £1,000 Year 2 - £1,400 Year 3 - £1,800 Year 4+ - £2,000||9.9%|
|The Co-op 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.
Of the remaining deals, the Co-op offers one of the biggest guaranteed overdraft limits and has a good reputation for customer service. Also, Santander's £50 cash gift, plus sensible overdraft limits, is well worth considering.
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.