Student bank accounts – a guide for UK students

Becoming a university student has many perks – greater independence, a new circle of friends, engaging study on a new course – and, for most UK students, the ability to access a student bank account.

Student bank accounts work in the same way as current accounts but with added extras such as freebies and interest-free overdrafts thrown in. 

The reason the banks like to woo students into banking with them in this way is that once you become their customer you are likely to remain one as a (hopefully high-earning!) graduate and beyond.

But before you go selecting the account that’s best for you, what are some of the important things to know?

How overdrafts work

An arranged overdraft is a common way of borrowing money from the bank through your current account. Although this is very nice to have while you’re studying, it does mean that any money you borrow through your overdraft, you will eventually have to pay back.

Ordinarily, when banks loan out money, they charge interest. Most student accounts however are 0% interest, meaning that uniquely, you will pay back no more than you borrow.

Some other important things to know about interest-free overdrafts are:

• The 0% interest period is not for life. Most banks will start charging interest on any outstanding overdraft after graduation so make sure you are paid up before being hit by charges.
• Some banks will advertise 0% interest overdrafts ‘up to’ a certain amount – meaning usually that the bank may offer tiered overdraft amounts which increase with each year of study – giving the full advertised amount in the final year and only on request.
• You don’t have to take out the maximum overdraft. If you’re careful with how you budget you may be able to keep your overdraft as a useful buffer that’s there to help you out in emergencies.
• Websites such as Save the Student and Money Saving Expert provide detailed comparisons of the student bank accounts that are on offer and their benefits, so you can make an informed decision. Which? also provides a comprehensive student banking guide. 

Once you have your student bank account, you might want to consider signing up to an app-based bank account as well like Monzo or Starling – and using this to track your spending and help you budget.

If you are worried about money or budgeting whilst at UCL, you can arrange to speak to the Student Funding Adviser about some of the financial support available from UCL. 

Last revised: April 2024

UCL Student Funding