Which are the best student bank accounts?

Comparing student bank accounts often begins with the amount of the 0% interest overdraft on offer, but it's worth checking the small print before signing up.

Other extras may be available from a bank, although it's important to check if they are really worth it or if they are available elsewhere.

Banks want students to begin a lifelong relationship with them, so there is usually plenty on offer to entice them into signing up for a student bank account.

Which are the top bank accounts for students?

All major high street banks offer accounts tailored to the needs of students. Some of them come with higher 0% overdrafts than others or additional features.

These are our top picks for student bank accounts:

We go into more detail about why these features are worth snapping up below, but it's worth looking closely at the eligibility criteria for a moment.

Several student bank accounts want students to sign up at the beginning of their course and most banks will demand their student account is the only one the student holds.

With that in mind, it's important to make the right choice first time.

Why are banks so generous to students?

The features listed in the table above include generous 0% overdrafts and other incentives to join, features standard current account holders can only dream of.

Banks want students to sign up with them simply because they want their higher earning power in the future.

Graduates tend to earn more than non-graduates, and banks are hoping students will remain loyal throughout their career and continue banking with them. Eventually, perhaps that graduate will take out a loan, credit card or a mortgage, bringing more business into the bank.

Of course, modern banking doesn't have to be like that, and graduates searching for a personal loan or credit card can look elsewhere.

Equally, once a student has graduated (and paid off any overdraft debt owing to their student account provider), there's nothing to stop them comparing bank accounts and switching to a different bank.

Loyalty is worthwhile only if the account holder is getting enough in return from their bank, so don't be afraid to switch if necessary.

Now that we've covered that, let's take a closer look at the important elements of a student bank account.

How to choose a student bank account

Banks are eager for students to sign up to their current account, so they will dangle numerous incentives depending on what's popular at the time and which companies they have partnerships with.

For many students, though, the defining feature of a student bank account will be the overdraft facility, so we'll examine that first.

What is their student overdraft like?

Most student bank accounts come with a 0% overdraft option. That means students can borrow up to a set amount during their studies and pay no interest until after they finish their course.

At that point, most students are moved on to a graduate bank account, and repayments start at a steady rate. However, that's one of the pitfalls of overdrafts to be aware of, as all the money will have to be repaid at some point.

When comparing student overdraft offers, consider the following:

1. Is the 0% overdraft guaranteed as part of simply opening the account or is it an 'up to' overdraft based on a credit check? Most overdrafts are based on passing a credit check, so it's worth understanding your credit score before applying.
2. Do you have to pay in a set amount per term or year to qualify for the overdraft?
3. Does the amount of the overdraft increase each year or is it static? Neither option is inherently better than the other, but it's worth knowing about.
4. What are the repayment conditions and do you expect to be able to meet them after you graduate?

Some people will recommend just choosing the student bank account with the biggest interest free overdraft and, while a good overdraft facility is a primary reason to choose an account, it shouldn't be the only consideration.

An overdraft is debt that will need to be paid back in the near future, unlike maintenance loans which are paid back when a graduate is earning enough to start repaying it.

Remember: just because you have the 0% overdraft, it doesn't mean you have to use it.

Any other banking features?

Banks will sometimes offer extra services to students such as interest on balances or access to free financial support.

We don't see many current accounts of any type offering interest on positive balances these days thanks to low interest rates, so these offers are comparatively rare.

Plus, ask whether the interest rate is actually going to be worth signing up for. Since many students will receive their maintenance loan every term and a huge chunk of it will go straight out for their rent payment, there won't necessarily be much money sat in the account to make 1% interest worthwhile.

Students with part-time jobs alongside their studies may benefit more from this, but interest paid on positive balances isn't usually a deal-breaker for student bank accounts.

Are there any freebies for signing up?

Another way banks try to attract students is by offering them free or discounted access to products and services they're likely to use.

Examples include:

• Free or discounted streaming service subscriptions
• Discount cards for eateries or cinemas
• Travel discounts such as railcards
• Event-specific discounts
• Other discounted subscription or one-off services

These may be nice to have, but it's worth thinking about the objective value of these freebies.

For instance, a travel card worth £70 a year might not be worthwhile if the interest-free overdraft on that account is only £1,000.

Streaming services are becoming popular giveaways, yet student discount cards can offer substantial savings on those and many mobile phone deals also come with options to add discounted services.

Sometimes the giveaways banks offer to entice students into banking with them are useful for a student; sometimes they aren't. It all depends on the student.

Does the bank account come with budgeting tools?

Access to budgeting tools within banking apps have become a common feature of all current accounts, and students perhaps need to use them more than most.

Whereas an employed person has regular money coming in, students tend to receive their maintenance loans and any other income in large lump sums at the beginning of term. That makes student budgeting even more important.

It's notable that digital only banks like Monzo and Starling haven't yet made the move into student bank accounts, although both are now offering teen accounts for 16- and 17-year-olds which may be a precursor to offering a full student banking service.

Those digital challengers are known for their in-app budgeting and account management tools which are ideal for younger people to budget with, yet there are plenty of other apps which fulfil the same purpose.

Thanks to the Open Banking revolution, banking customers can allow secure third-party apps to access their account information and help them to budget and analyse their outgoings.

There are plenty of these secure services around, so the fact a student bank account may not come with the best in-app budgeting tools needn't be a deal-breaker.

Are there any branches near your university?

Bank branch locations are much less important than they used to be thanks to online and mobile banking.

However, some students may still prefer to hold an account with a bank that has a branch in their university location, just for the ease of contacting them if something goes wrong.

With bank branches closing all the time, though, it might not be enough that a branch is in an area now as it might not stay there for very long.

Opening a student bank account

To open a student bank account, certain criteria will need to be met. The specifics can vary between different student bank account providers, but these are common points:

• Applicant must be 18 or over
• UK residency for a set period may be required
• Students must not have a student account with another bank
• Student must be on a qualifying university course

The rules on university offers differ from bank to bank. So, while some may accept a conditional offer as proof of acceptance, another bank may want to wait until the student is officially accepted.

For students who like to prepare early, this could mean some banks rule themselves out by being too restrictive in their application process.

On the other end of the scale, some banks will have limits about how long a student is able to open an account with them after a course begins while others will accept any student at any time, provided they don't already have a student account or are willing to transfer the one they do have.

This could mean those who accept late offers to university or don't prepare too much beforehand could miss out on some student bank account offers.

It's worth remembering that some of these rules may not be hard and fast. If a student has a genuine reason for applying for a student account a month after the deadline the bank usually sets, there may be room for manoeuvre. Contact their banking team and find out.

How to open an account

Although more banking activities are taking place online these days, there's a strong chance that students will need to attend a branch to complete the sign-up process even if they have applied to open an account online or via the banking app.

This is because banks need to see evidence of a student's residency and university acceptance status before they can formally open the account. It's a hurdle to jump over, yet it's worth it considering the benefits of a student bank account.

Students will normally need the following to apply:

1. One or two forms of photo ID
2. Proof of address such as a recent bank statement or utility bill
3. Proof of their student status such as a UCAS offer letter or a letter of acceptance from a university

With the right documents, applying and opening the account should be straightforward. If you run into any problems, banking staff are usually happy to help for the major reason we mentioned above - they want you more than you need them.

Conclusion: banking with perks

Student bank accounts are definitely something special in the current account marketplace, and anyone signing up for a full-time university course should apply for one.

It isn't only the interest-free overdraft that is of interest for students, but the extras on offer and the ability to be treated like a student by your bank.

This means you may receive access to tailored support and products which can help to boost your financial knowledge as well as giving you the budgeting tools to manage your money later in life.

Student bank accounts with interest-free overdrafts are a much better alternative than student credit cards or commercial loans, and they can help graduates pay off their accrued debt slowly rather than facing a cliff-edge repayment schedule.

Just like when shopping for student broadband, students should carefully consider the option that works for them and their money, allowing them to stay in control of their finances during their degree.

What are the biggest mistakes graduates make with their money? Find out.