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The best student bank accounts in 2022: Cash offers, railcards and 0% overdrafts

Written by: Sarah Davidson
NatWest is the latest bank to announce a cash giveaway to students opening a current account ahead of the new university and college year starting in September.

The bank is offering new student account customers a cash payment of £80 paid within 10 working days of opening plus a four-year Tastecard offering discounted meals, cinema tickets and shopping.

It comes with a £2,000 interest-free overdraft available in the first year of study, with students able to use £500 in the first term before having access to the full overdraft from the second term.

As good as the deal is, HSBC is offering students opening its current account £100 cash and its interest-free overdraft is £3,000. Nationwide’s Flex Student account also comes with a £3,000 interest-free overdraft but doesn’t offer any extra perks.

Rachel Springall, finance expert at data site Moneyfacts, said students comparing accounts this year will find a variety of perks but choosing the right account really depends on what will provide the most value for money based on individual spending habits and borrowing needs.

She said: “Fundamentally, a competitive overdraft may be a key factor for some students, but this debt does need to be paid back once they finish their studies.”

TSB’s student account may be worth a look if you’re sure you can keep your balance above £0, with the bank promising to pay 5% interest on money in the account up to £500. Its interest-free overdraft offer is less generous though, at £1,500.

Students opting to open Santander’s account can draw on an overdraft of up to £2,000 interest-free. Customers will also receive a four-year Railcard worth £120, which gives a third off rail fares across Britain.

RBS’s student offer includes a £2,000 interest-free overdraft and a four-year Tastecard, while The Co-op bank offers a £2,000 interest-free overdraft.

Both Barclays and Halifax are offering a £1,500 interest-free overdraft with no added extras, though Halifax will pay 0.1% interest on in-credit balances.

Lloyds Bank’s interest-free overdraft is up to £2,000, with no added rewards on offer.

‘Tempting offers but you need to be smart’

Owen Burek at Save the Student advised looking beyond the freebies on offer and considering what’s of most value to you.

“Offers including free products, travel discounts, cash rewards and ‘exclusive’ deals may sound tempting, but you need to be smart,” he said.

“A student bank account offering a freebie worth £20 is pitiful compared to a large interest-free overdraft for three years or more.”

Burek said the “best thing” about student bank accounts is that money borrowed through an overdraft has 0% interest.

He added: “With an interest-free overdraft, you pay back nothing more than what you borrow. This is unique to student bank accounts, so take full advantage of it.

“Even if you don’t need the full overdraft, transfer some of it to a savings account. You can then make money by earning interest on the borrowed money whilst you’re a student.”

Springall suggested that for any students who have money concerns, they should speak to family and friends for advice in the first instance, but also take some time to find a decent student account to stand by them during their years of study.

She said: “Taking advantage of free mobile apps to budget and keep an eye on expenses on the go, such as with Money Dashboard, is also wise. As with any bank account perk, students must check the overall package before they commit.”

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