Beginner's Guide To: Student Current Accounts

As the start of a new university year beckons, students offer rich pickings for the banks. However, just because a provider is offering discounts in your favourite shop, or tickets to a gig, does not mean their account will be the best for you in the long run. Below is a guide to how to pick a student account that best suits your needs.

Overdraft

A typical student will, at some point, need to rely on an overdraft during their university life. Most student accounts offer 0 per cent interest on overdrafts, and the majority of banks offer these on a tiered basis. For example, in your first year you may be offered an overdraft limit of £1,000, which can then be increased per year to match your needs up to a maximum of around £2,000.

In-Credit

For those who won't need t o go overdrawn, look at accounts that pay interest on balances in credit. Alliance & Leicester has a market-leading account for

under-21s. While not aimed at students, the Premier 21 Account pays an interest rate of 5 per cent fixed for one year on balances up to £1,000. The rate then drops to a less-attractive variable rate of 1 per cent. The only catch is that you must credit the account each month, although there is no set limit to how much you pay in.

Need a freebie?

If you cannot live without a good freebie then one of the best accounts available is the NatWest Student Account. You will get an 18-25 railcard worth £125, valid for 5 years. You will also receive a discount card which gives you 20 per cent off at selected high street retailers. However, the in-credit rate is only a minuscule 0.1 per cent.

Also worth considering...

For many freshers, university will be the first time in their life they've had to worry about financial matters. Therefore, see which banks have branches on campus or near the university as they will have specially-trained staff who can help advise on any money-related problems.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

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