Student bank accounts

The interest-free overdrafts offered by student bank accounts can be useful for providing a cash flow between student finance payments, but you should be careful not to rely on them too much.

Student bank accounts are not mandatory, but they do offer certain advantages.

International students: Opening a bank account in the UK is different for you.
View our guidance on opening a bank account as an international student.

Advantages of a student account

The main advantage of student bank accounts is that they may offer interest-free arranged overdrafts. This means that you can borrow money (to a pre-agreed limit) without paying interest on it. Generally, this is only if you have your student finance paid into that account. This means that you can only have one student bank account.

Banks often offer incentives to open a student bank account with them, such as shopping vouchers. However, make sure you open the best account for you and not just the one with the best incentive. Different banks offer different terms and conditions, so make sure to read the fine print and choose an account based on your needs, whether it’s the largest overdraft or a railcard to make travelling home cheaper.

Student bank accounts can provide a useful harness when walking the financial tightrope of student living, as long as you use them responsibly. Remember that an overdraft is a limit, not a target. It should be viewed as a source of money to help you manage your cash flow between loan payments, so careful budgeting is still essential.

Get help with budgeting.

What to watch out for

Exceeding your arranged overdraft limit can result in charges and affect your credit score. To use your student account responsibly, make sure you know your arranged overdraft limit and check your bank account regularly to avoid charges.

Remember that the money you borrow has to be paid back eventually. To escape any interest charges, make sure you know the terms and conditions of your account, including what happens once you’ve left university.

When you go into a branch to set up an account, a member of staff should be able to tell you all of the details. Some banks will convert your student account to a graduate account at the end of your degree. Often, these also have an interest-free overdraft for a set period, to give you enough time to pay back money that you borrowed using the overdraft facility.

Further advice

If you have any questions about student bank accounts, or how to handle your finances whilst at university, you can contact the Advice and Money Team.

Advice and Money (Cathays)

Advice and Money (Heath Park)

Advice and Money (Cardiff Business School)