Best student accounts for 2022, from HSBC’s £100 cash to Santander’s railcard


As the start of a new academic year draws near, banks are once again battling it out to lure university freshers into opening an account with them.

Last academic year there were 2.66million students enrolled at UK higher education institutions, according to the latest government figures.

With many learning to manage serious amounts of money for the first time, this is big business for banks.

Look to the future: Banks are prepared to tempt students into opening an account with them in the hope they will secure a valuable customer for life 

Although students are unlikely to be stashing away savings right now, banks are keen to snap them up because they may become valuable customers for decades to come.

Students can therefore find plenty of perks, from free cash to railcards and retail discounts – but they should also consider which account best suits their spending habits before committing.

Things like overdraft limits, interest charges and overseas transaction fees can all make a dent in their budget if they are caught unawares.

This is Money has balanced the perks and the terms and conditions to pick out some of the best options for those heading to university in September and October.

Best for free cash – HSBC

Perks: HSBC has put itself in pole position to scoop up students with a tantalising £100 cash offer. 

To qualify, students must make a minimum of five transactions using the HSBC debit card within 30 days of opening the account.

Students can also benefit from discounts at Costa Coffee, ASOS and Boohoo among others, via its Home&Away offers programme.

This gives all HSBC cardholders offers on shopping, dining, travel and experiences both in the UK and abroad.

Easy money: HSBC is offering students a £100 cash incentive to sign up for an account

Easy money: HSBC is offering students a £100 cash incentive to sign up for an account

Overdraft: Students get an interest-free limit of up to £1,000 in their first year, then up to £2,000 in their second year and £3,000 in their third year.

Both arranged and unarranged borrowing is charged at 0 per cent on student accounts.

If a student does go over their arranged overdraft limit HSBC will consider an unarranged request and will make the payment if it can, subject to status. 

In some cases it may allow the student to go in to an unarranged overdraft, for example, when needing to pay an energy bill. 

However it is limited to small amounts, and larger or frequent unarranged overdraft requests will be more likely to be declined. 

In the red: Most banks either prevent students from exceeding their arranged overdraft limit or won't charge them for doing so - but it's important to double check

In the red: Most banks either prevent students from exceeding their arranged overdraft limit or won’t charge them for doing so – but it’s important to double check

Small print: A student paying for something using their HSBC debit card whilst outside the UK will be charged a non-sterling transaction fee of 2.75 per cent per transaction.

If they withdraw money from an ATM outside the UK, they’ll also need to pay a ‘non sterling cash fee’ of 2 per cent. This is limited to a minimum and maximum charge of £1.75 and £5.00 respectively.

To qualify for the account, a student needs to be 18 or over and to have lived in the UK, Channel Islands or Isle of Man for at least three years.

They can’t have another student account elsewhere, and they will need proof they’ve been accepted on to a qualifying course at a UK university or college.

After graduation: HSBC will move students onto a free graduate account after their course finishes.   

In the first year after graduation, graduates may be eligible for an interest-free overdraft of up to £3,000, and up to £2,000 in their second year after graduation. 

In their third year after graduation, HSBC will move graduates to an Advance account or standard bank account. 

Graduates may still be eligible for an arranged overdraft of up to £1,000 interest-free to help make life easier – subject to status and how the account has been used.

Any arranged overdraft above these amounts will be charged interest at 39.9 per cent.

Best all rounders: NatWest or RBS

Perks: Similar to HSBC, both NatWest and RBS are whetting the appetite of students with a cash bribe – though they are offering a slightly more modest £80 each.

Both banks are also offering a four-year Tastecard membership for free.

This gives students the chance to get two meals for the price of one, or 50 per cent off their food bill, at thousands of UK restaurants – as well as discounts at the cinema.

Natwest and RBS are offering both a £80 cash bribe and a four-year Tastecard membership to lure students in

Natwest and RBS are offering both a £80 cash bribe and a four-year Tastecard membership to lure students in

On average, they can save £19 per meal, according to Tastecard, adding up to £226.56 a year if they eat out just once a month.

A Tastecard membership costs £39.99 a year, so this could equate to a total £159.96 saving over four years for someone who was already likely to get one.

Overdraft: Both NatWest and RBS allow for an interest free overdraft up to £2000, although during the first term this is limited to £500.

To apply for an arranged overdraft students need to be 18 or over, although they can add an overdraft to their account once their course has started.

Neither bank will charge interest or fees on a student account that enters an unarranged overdraft. 

However, if a student has a regular payment on their account and this payment is rejected, NatWest will charge an unpaid fee of £2.75. This is capped at one unpaid fee per month. 

Do your homework: Young adults starting university are eligible for a student account that often comes with benefits and interest-free overdrafts

Do your homework: Young adults starting university are eligible for a student account that often comes with benefits and interest-free overdrafts

Small print: Students need to apply for the account before 31 October to get the £80 cash or four year Tastecard.

The foreign currency conversion fee for payments and withdrawals outside the UK is 2.75 per cent of any transaction.

Students must be 17 or over and a British citizen who has been living in the UK for at least 3 years.

They need to be a full-time undergraduate student on at least a two-year course at a UK University or College, or completing a full-time postgraduate or nursing course lasting a year or more.

After graduation: A student account will automatically change to a graduate account.

Students will continue to receive an interest free arranged overdraft, although this will reduce in the second year to a maximum of £1,000.  

In the third year, gradates will be moved onto the regular free current account and their arranged overdraft will no longer be interest-free.

Any arranged overdraft limits over the interest-free threshold will incur fees and charges amounting to 39.49 per cent. 

Watch out for the overdraft trap

While all the banks on this list will either block students from exceeding their interest-free buffer, or refrain from charging interest if they do, others will charge student borrowers overdraft rates of close to 40 per cent if they borrow too much. 

It is also worth noting banks will not necessarily give applicants the maximum fee-free overdraft they advertise on their websites. The limit can often be based on the student’s credit score. 

Students should check their score before they apply (it is free to do so) and try and improve it if they can.

If students don’t have any other borrowing, they can try and give their score a boost in other ways, such as by registering to vote, or registering their mobile phone contract in their own name rather than a parent’s. 

Best for UK travel – Santander 

Perks: The big money saver with this account is a free four-year 16-25 railcard, which will enable students to shave a third off their rail travel in the UK.

A 16-25 railcard costs £30 each year to renew, so over a four year period it could save a total of £120 on the card itself – and that’s before they start saving on journeys. 

However, it’s also worth pointing out that it is possible to pay £70 for a three-year railcard.

People with the railcard save an average of £159 per year, or £4.56 per journey, according to Railcard.co.uk.

On top of the railcard there is also some cashback available for those who switch on Santander’s  ‘Retailer Offers’ feature via their online or mobile banking.

Students choose which offers to save to their card, and benefit from up to 15 per cent cashback when they spend with certain retailers including Just Eat, Morrisons and Costa.

Overdraft: Santander allows for an interest-free arranged overdraft of £1,500 in the first three years, £1,800 in year four and £2,000 if they stay on to year five.

If a student tries to make a payment that would take them into an unarranged overdraft, Santander makes the decision on whether to allow or reject the payment based on their individual circumstances.

If it allows a payment, it will take them into an unarranged overdraft, but it does not charge interest or fees for unarranged overdrafts on the account.

Rail-y good: Santander's 123 Student account has long been seen as one of the best offers around, with a free four-year 16-25 Railcard thrown in

Rail-y good: Santander’s 123 Student account has long been seen as one of the best offers around, with a free four-year 16-25 Railcard thrown in

Small print: The foreign currency conversion fee for payments and withdrawals outside the UK is 2.95 per cent of any transaction.

However, the bank does not charge a fee for withdrawals from Santander cash machines in Spain.

Students must be 18 or over, live in the UK permanently, and be able to pay in at least £500 per academic term.

They need to be studying or about to begin an undergraduate course that is at least two years in length, or a level four to seven apprenticeship.

If they are about to begin a course, they must have an unconditional or ‘confirmed conditional’ offer before they apply.

Finally students must not already have an existing Santander current account, and if they do, they will need to transfer it to a student one.

After graduation:  The student account will automatically transfer to its graduate account at the end of the course.

Students will continue to receive an interest free arranged overdraft, although this will reduce in the second year to a maximum of £1,000. 

For those who dip into their unarranged overdraft they will be hit with a £5 daily charge – capped at 10 days in each monthly statement period.

What about the digital banks?

Smartphone banks Monzo and Starling have snapped up millions of young customers who are used to banking solely on their mobiles. Both offer accounts to 16 and 17-year-olds. 

While students may be attracted to them as money management services to help keep track of their incomings and outgoings, neither bank offers a dedicated student account.

That means they don’t offer the same sizeable interest-free overdrafts as the accounts mentioned here, so for those who plan on using their overdraft frequently it could get expensive.

Starling charges between 15 per cent and 35 per cent depending on a customer’s credit score, and Monzo between 19 per cent and 39 per cent.

Best for overseas travel: Nationwide

Perks:This could be a great card for those who expect to travel during their time at university. Nationwide’s card is free to use abroad, unlike any of the others.

It is also one of the best accounts on the market for overdrafts.

By the end of a three-year university course, students who bank with Nationwide can get up to £3,000 interest-free, provided they request an increase every year.

Overdraft: Students can request up to £1,000 in each year of study, to a maximum of £3,000 in the third year.

The account is designed to prevent students from going over their arranged overdraft limit.

Small print: Students need to be 18 or over and not have a student account with another provider – although they can switch an existing student account over to Nationwide.

They must also have been accepted on to a full-time UCAS course lasting at least two years in the UK, and have an unconditional offer.

In addition they will also need to pay in at least £500 each term from the date they open their FlexStudent account.

After graduation: Unless a student makes other arrangements, Nationwide will move the account to a FlexGraduate account.

Its FlexGraduate account will last for three years, if the course was three years long or more. It will last for two years if the course was two years long.  

With the graduate account there will still be an interest-free arranged overdraft, but Nationwide will reduce the limit each year.

After that, it will move graduates onto one of its everyday bank accounts, which will mean paying 39.9 per cent APR when dipping into the overdraft.

THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS

Chase Bank’s will pay £1% cashback on spending for the first 12 months. Customers also get access to an easy-access linked savings account paying 1.5% on balances up to £250,000. The account is completely free to set up and is entirely app based.

Santander

Virgin Money’s M Plus Account offers £20,000 Virgin Points to spend via Virgin Red when you switch and pays 2.02 per cent monthly interest on up to £1,000. To get the bonus, £1,000 must be paid into a linked easy-access account paying 1% interest and 2 direct debits transferred over.

Natwest

HSBC’s Advance Account pays £170 when you switch to the account. You need to set up two direct debits or standing orders and pay in at least £1,500 into the account within the first 60 days.

Santander

First Direct will give newcomers £150 when they switch their account. It also offers a £250 interest-free overdraft. Customers must pay in at least £1,000 within three months of opening the account.

Nationwide

Nationwide’s FlexDirect account comes with up to £125 cash incentive for new and existing customers. Plus 5% interest on up to £1,500 – the highest interest rate on any current account – if you pay in at least £1,000 each month, plus a fee-free overdraft. Both the latter perks last for a year.

Barclays

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