Home > Student Finance > A Simple Guide to Student Banking

A Simple Guide to Student Banking

By: J.A.J Aaronson - Updated: 11 Aug 2012 | comments*Discuss
Student Banking Finance Overdraft

When living at home, you are unlikely to have that much use for a bank account. You may have a wage from a weekend job but, while at school or college, your use of your current account will probably be limited.

New importance

Once you start university, however, your bank account will become much more important. The government will only pay your student loan into a valid bank account, and you will also probably need to set up direct debits or standing orders in order to make regular payments for such things as rent and electricity. And, of course, you will require cash, which will most likely be drawn from an ATM. As you can see, you will probably be using your bank account on a daily basis as a student and, as a result, it is important that you pick an account with which you are happy.

Banks operate on the basis that you are unlikely to leave them at any point during your life. As a result, there is a great scramble to sign up as many students as possible, as evidenced by the large incentives some of them offer. However, you should try not to be sucked in by offers of free CDs or MP3 players; there are, in fact, more important considerations to make. There are certain key features which you will be requiring in an account. The banks have looked at many of the services needed by students and have created accounts tailored specifically to you. It is almost certainly best, therefore, to look at these first.


As pessimistic as it sounds, the most important feature of your account is likely to be your overdraft facility. An overdraft is not the most economically viable way of borrowing large sums of money, but it should be sufficient to solve your inevitable cash flow problems. Most student accounts now offer an interest-free overdraft, through which you will not incur charges. The limits imposed on these vary according to the bank, but they can be as high as £2750.

You may require further borrowing power, in the form of a credit card. Most banks will offer you a card with your account, but you should remember that this is a very expensive way of borrowing. Always check the APR of the credit card and, if you think that you will need it, don't feel obliged to take the card offered to you with your student account. Shop around, and you are likely to find a much better deal. Any credit card will have a minimum monthly repayment, although this is often as low as £5. It is crucial that you make this payment on time, however, as your all-important credit rating will suffer if you are late.

Other factors

There are other factors which should also be considered. One of the most important is likely to be the means by which you can access you account. Almost every account now comes with internet banking, meaning that you can perform many of the functions previously only available over the counter anywhere you have an internet connection. Similarly, telephone banking is now the norm, although this has been very much superseded by the internet. The location of your nearest branch may also be a consideration if you anticipate that you will, for example, be paying in a lot of cheques. Many banks now have on-campus branches, but you should remember that, in the vast majority of cases, visits to a branch are seldom necessary.

The key rule of any consumer finance still applies to student banking. Make sure that you shop around, and make sure that you look for any hidden clauses tying you in - for example, ensure that you are not committing to an account with any bank for, at the very most, the duration of your time at university.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

(never shown)
(never shown)
(never shown)
(never shown)
Enter word:
Latest Comments
  • Howie
    Re: A Guide to Unemployment Benefits
    On 15 July I have to go to court. I may be looking at a driving ban. If I am (hopefully I won't be) will I be allowed to…
    10 June 2019
  • Crazydiamond
    Re: What is SERPS and What Was 'Contracting Out' ?
    Hi i took the serps option in 1988, I am now 58 but unable to trace this pension, can anyone help me in…
    29 May 2019
  • Lolly
    Re: A Guide to Unemployment Benefits
    Hi i am currently working in the care sector my age is 61 i have been trying to get varicose viens removed for 7 years plus…
    16 May 2019
  • Dave
    Re: Taxation for the Self-Employed
    I am PAYE and Self Employed through CIS. I earned £41k in PAYE and a mere £3500 self employed, (before tax) I have a…
    24 April 2019
  • Stanharris
    Re: Renegotiating Your Loans
    Thanks for sharing a valuable information. It is really informative and helpful. the information that you have shared is really useful.…
    4 April 2019
  • Oggy
    Re: Taxation for the Self-Employed
    I’m a construction worker on cis can I claim back my 20% tax back on my first 12k tax is deducted before I’m paid although I’m…
    1 April 2019
  • Caz
    Re: How Much Tax do I Have to Pay?
    Iv just started working for an agency I will be played weekly they not taken out tax and national insurance I have to have my…
    23 March 2019
  • SylviaBlood
    Re: A Guide to Unemployment Benefits
    an you help me pls I had operation on my kidney followed by chest infection I then went profound deaf had cochlear implant…
    19 February 2019
  • sylv
    Re: A Guide to Unemployment Benefits
    i returnee red to work after 2operations I was on ESA support group con based. I went to work I had my hours cut but unable…
    19 February 2019
  • Jax
    Re: How Much Tax do I Have to Pay?
    I earned £924 for working 99 hours last month yet between tax and national insurance Im just bringing home £690 is this right?
    24 January 2019