Student and Graduate Bank Accounts
Why would 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 directly into it 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 and the Save the Student website both compare different student bank accounts, including information on overdraft limits and anything the bank is giving away when you open an account. They also give information and top tips on opening and running an account.
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 an accommodation deposit 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 also help with cash flow difficulties – this means where you have enough money overall but the times you are paid it don’t match 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. If your overdraft can be increased each academic year you will normally need to remember to ask for this, as it will not normally happen automatically.
If you need to apply to Queen Mary's Financial Assistance Fund (FAF), you would normally need evidence you have at least applied for an overdraft, and that if you have one, you are using it. For example, if you have been refused an overdraft, ask the bank for a letter confirming this. If you choose not to take an overdraft which would otherwise be available to you, the Bursaries Office will usually add a notional amount to your level of income in the assessment of your FAF application.
Can everyone get a student bank account with an interest free overdraft?
If you are a UK student, as long as you pay your Student Finance into the account, you should be able to get a student bank account with an interest free overdraft. If you are refused one, check with the bank what the reason was, for example an issue with your credit rating. You should keep a copy of any bank letters you are given refusing you an interest free overdraft so you can submit these with any FAF application you make.
What happens if I exceed my agreed overdraft limit?
Make sure that you 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. If you are in financial hardship, contact a Welfare Adviser. You might also be able to get financial help from Queen Mary's Financial Assistance Fund (FAF).
Where can I get more advice about managing my overdraft?
A Welfare Adviser in the Advice and Counselling Service can advise you about your options if:
- you are regularly exceeding your overdraft limit
- your bank will not agree to increase it
- you are incurring high unauthorised overdraft charges
- your overdraft facility has been withdrawn
- you cannot afford to repay your overdraft but are being asked to
To help you avoid exceeding your overdraft limit and stay within your budget, you can use the resources on the Advice and Counselling Service Advice web pages Planning a Budget and Managing Money.
I’ve finished my undergraduate degree and am now a full time postgraduate student – can I still get a student account with an interest free overdraft?
Most banks will automatically convert your existing student account to a graduate account once you complete your undergraduate studies. However, if you let your bank know that you are continuing as a full time postgraduate student, they may allow you to keep your student account with an interest free overdraft facility, especially if you will be in receipt of a UK government Masters Loan which will be paid into your account in three instalments.
Even if you are currently overdrawn or have not graduated recently, your earnings potential as a postgraduate student will normally attract offers of accounts with preferential terms and conditions including interest free overdrafts. Shop around for the most suitable according to your individual circumstances and remember to check fees and charges for exceeding your agreed overdraft limit as these could be per day and work out very expensive. The moneysavingexpert website has more information and a comparison of the best graduate 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, for example, from earnings, if you have an account with the 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.