Student Bank Accounts
Why should I open a student bank account?
The main advantage of opening a student account or switching an existing current account to a student account is that the majority of student accounts come with an interest free overdraft facility. Some banks might try and entice you to open a student account with them by offering free vouchers or other items. However, an interest free overdraft is likely to be of much greater financial benefit to you than any voucher so think carefully before choosing which bank to apply to.
When should I open a student bank account?
Open your bank account early, before the start of the academic year if possible. You can usually do this as soon as you have a UCAS confirmation letter with a conditional or unconditional offer. If you get Student Finance, you need a bank account in time for your first instalment to be paid in to it directly from Student Finance England in September.
How do I choose a student bank account?
It is important to compare all the deals available from different banks and choose the best one for you. You might also want to check whether the account is online only or if there is easy access to a branch where you could speak to someone in person, depending on your personal preference. The moneysavingexpert website compares different student bank accounts and gives information and top tips on opening and running a student account.
The Save the student website also has a section on the best student bank accounts.
Why is having an interest free overdraft useful?
An interest free overdraft allows you to spend more money than you have in your current account, up to the overdraft limit set by the bank, without you being charged interest for this. You could use your overdraft to pay for things like accommodation deposits and rent in advance which you might need to pay before your Student Finance arrives. But remember that this is money which you will eventually need to pay back after you graduate, although if you have stayed within your overdraft limit your bank will normally allow you to repay it gradually over a period of time rather than all at once by offering you a graduate bank account. Overdrafts can help with cash flow difficulties – this means where you have enough money overall but the times you are paid don’t coincide with the times you need to pay for expenses. For example, your Student Finance is paid to you three times a year, but bills often need to be paid monthly and the dates won’t always coincide.
You might also be able to increase the amount of overdraft facility you have each year or temporarily increase the amount of your overdraft for a short period of time if you have a sudden unexpected financial difficulty – check with your bank when you open your account whether this will be possible.
Can everyone get a student bank account with an interest free overdraft?
Providing you pay your Student Finance into the account, you should be able to get a student bank account with an interest free overdraft. However, if you have a poor credit history, you might find it is harder to get an interest free overdraft. If you are refused one, ask the bank for the reason, and contact a Welfare Adviser for further advice.
What happens if I exceed my agreed overdraft limit?
Keep a close check on your account so that you do not exceed your agreed overdraft limit, as this can incur large penalty charges. Different banks have different terms and conditions - some impose charges for each day you exceed your limit whilst others will charge a one-off fee. Always read the terms and conditions of your overdraft facility so you are aware of what will happen if you exceed your overdraft limit. If you feel that you will need an increased overdraft limit for a period of time, try and plan ahead and negotiate with your bank so you avoid paying excessive fees and charges for an unauthorised overdraft.
Paying overdraft charges is causing me financial hardship – what can I do?
Charges for exceeding your overdraft will usually be debited from your account automatically so you will not be able to stop the transactions. However, if paying these will cause you financial hardship, you may be able to reclaim the money in certain circumstances. The moneysavingexpert website has more information about this. You might also be able to get financial help from Queen Mary University of London Financial Assistance Fund. A Welfare Adviser can explain your options.
To help you avoid exceeding your overdraft limit and stay within your budget, you might also find it useful to read the Advice and Counselling Service Advice guidance on planning a budget and managing money – you can use the spreadsheets on our website to do this.
I’m studying medicine/dentistry as a second degree – can I still get a student account with an interest free overdraft?
Let your bank know that you are continuing as a full time undergraduate student and they should allow you to keep your student account with an interest-free overdraft facility, if you will be paying regular student finance/NHS bursary funding into your account. See the previous sections for more advice about student accounts.
You might not be able to get an interest-free overdraft facility in the same way as a UK student, particularly if you have just moved to the UK and if you do not get Student Finance for living costs. However, you may be able to negotiate one with your bank if you have a regular and reliable income, or if you have an account with the same bank in your home country, or if you have lived in the UK for some time.
Law, regulations and policies can change quickly. The information on our website is given in good faith and has been carefully checked but QMUL cannot accept responsibility for any errors or omissions. QMUL is not responsible for the content or reliability of the linked websites which are provided for further information.