How to Choose a Student Bank Account

28th December 2021
A student using their laptop to look up bank accounts

There are a number of student bank accounts out there but they all seem to offer the same benefits. So, how do you choose between them? How do you know whether you’re choosing the best option for your needs?

We hope to help with that.

Sanctuary Students are about so much more than just a room. We want your time as a student to be as enjoyable as our own was, and part of that is helping you manage money.

Being a student is rarely a time of plenty but it’s the perfect opportunity to learn the essential money management skills you’ll need for the rest of your life.

Choosing your student bank account is the first of many steps along that journey.

We’re not going to make specific recommendations because everyone does that. Recommendations quickly go out of date and we would rather share the principles of savvy financial management than simply recommend the best student bank accounts.

What is a student bank account?

First, let’s tackle the difference between a student bank account and a standard current account.

The answer is, not a lot. The main difference is that you’ll get a larger overdraft facility with a student account than you do with a current account.

Overdrafts in current accounts are minimal and often charge interest.

Overdrafts in student bank accounts can be much larger, often up to £3,000. They will also be either interest-free or very low interest and you won’t need to repay it until after graduation.

There is also often the opportunity to expand that overdraft if you discuss it with your bank first.

Many student bank accounts will often have free perks or discounts with selected partners, but they change all the time so you’ll have to look carefully at what’s on offer when you apply.

What to look for in student bank accounts

There are a few things we should all look for when shopping around for a student bank account.

They include:

  • Overdraft facility

  • Fees

  • Freebies

Let’s take a quick look at each of these points before answering a few essential questions on student bank accounts.

Overdraft facility

The overdraft facility is arguably the largest benefit of a student bank account. You can access a much higher overdraft than a current account. You’ll also usually pay 0% interest on that overdraft until you graduate.

The typical overdraft amount is around £3,000, which should be enough to see you through if you manage your money effectively.

You can borrow more through your overdraft if you need to but you must agree it with your bank beforehand. If you don’t, you could face heavy financial penalties and perhaps higher rates of interest on the excess.


Most student bank accounts don’t charge fees for standard banking, but a few do. Expect to pay fees for international transfers, not making minimum payments or deposits or not adhering to the conditions of the account.

International students may need to look much closer at the fees for particular student bank accounts.

Some will charge international transfer fees, currency conversion fees and perhaps other fees, depending on the account.


Most student bank accounts offer freebies to help convince you to bank with a particular institution.

For example, the HSBC Student Bank Account offers an ASOS Premier Delivery offer or a £20 Uber Eats voucher. The Santander 123 Student Account offers a more practical 16-25 Railcard with £100 credit.

These offers are subject to change, but you get the idea.

Freebies are great. We all love getting something for free, but make sure it is free. Also make sure to look past the freebie.

Sure, it would be nice to get free delivery on clothes for a year, but if the account doesn’t quite work for you or doesn’t deliver the quality of service or flexibility you need, you would be better off banking elsewhere.

Key considerations when looking for the best student bank accounts

There are a few considerations that are important to bear in mind when shopping around for the best student bank account.

How will you use your account?

Do you want an account to pay bills or manage rent on your student accommodation? Do you need a card? Need to make international payments or receive international deposits?

Spending a minute thinking about how you’ll use your student bank account should help focus your mind when making a decision.

You want the best tool for the job, not just the account that offers the most enticing discount or free offer.

How will you use the overdraft?

Some student bank accounts offer a small overdraft for your first year and then gradually offer more each year going forward. Will you need a lot of cash up front or do you think you’ll need more later?

Remember, just because the overdraft is there, it doesn’t mean you have to use it. However, if you envisage you will need it, you’ll want sufficient funds available to make your first year one to remember!

How will you repay the overdraft?

While it’s a little early to think about repaying the overdraft, you should at least give it some thought. Each student bank account handles repayment slightly differently, so it’s worth spending a little time researching how each bank wants you to handle it.

Some of the best bank accounts automatically convert your student bank account into a graduate account with a 0% interest option to help you repay.

Not all do, though, which is why research is critical!

Remember ‘up to’ does not mean guaranteed

Some student bank accounts use ‘up to’ £3,000 overdraft. This means you could be offered between £0 and £3,000 and are not guaranteed the top amount.

Opening a student bank account requires a credit check. If you have a poor history already, you’ll struggle to match the maximum offer.

Some student accounts provide a flat overdraft offer while others use that very important ‘up to’ caveat. You’ll see that a lot through life, so it’s useful to get to grips with it nice and early!

Top tips for choosing the best student bank account

Finally, we’ll finish with some quick tips for choosing the best student bank account for your needs.

  • Look beyond the freebie – We covered this above but it’s important enough to reiterate. Make sure the account you choose offers the features and flexibility you need.
  • Don’t be afraid to switch if your account doesn’t work – You’re fully entitled to switch bank accounts if you want to, so don’t be afraid to do that if your account isn’t working out.
  • Make sure you know the repayment requirements before dipping into your overdraft – An overdraft is not free money, it’s a loan. An incredibly generous 0% (mostly) loan, but still a loan. Make sure you know how you have to repay it.
  • Keep an eye on your credit score – Overdraft is borrowing, which impacts your credit score. If you miss a payment, go over your limit or don’t handle the debt well, it will negatively impact your credit score, which impacts every area of your financial life.

Choosing a student bank account isn’t quite as vital as choosing the right university but it’s up there. The right account, with the right fit, makes managing money simple, and that’s the name of the game