Yahoo Finance A-level results 2017: 10 of the best student current accounts for September
Freebies, anyone? As a new tranche of school-leavers get their A level results and start to prepare for their descent on university campuses across Britain, so banks begin their yearly fight to win custom.
But students beware: the generous interest-free overdraft and cashback perks on display can turn into a money trap if you fail to keep to the conditions of the account or pay back money back in time.
Our research shows generous switching incentives worth up to £160 can quickly be cancelled out by onerous overdraft penalties of £5 a day.
Students are highly profitable to bank profits as those who open an account during their studies tend to stick for years. This means the banks can cross-sell more profitable products like a personal loan or a mortgage, after a student graduates.
1) Santander 123 for students
Santander offers students a free four-year Young Person's Railcard - which usually costs £30 a year - giving holders one-third off rail travel. It's also one of the only student accounts to offer in-credit interest.
It pays up to 3pc interest on balances between £300 and £2,000. Students with savings of £100 to £200 earn 1pc; 2pc is paid on balances between £200 and £300.
For those who need the cash, an interest free overdraft of up to £1,500 in the first three years of your course is available. Fourth year students get up to £1,800 and in the fifth year the interest-free overdraft is increased to £2,000.
This must be arranged - if you go into overdraft without getting it approved first, you could be charged £5 a day, up to £50 a month. The fee for unpaid transactions is £10 per payment that bounces back.
You need to pay £500 every academic term and register for online banking to receive these perks.
Students can also earn up to 15pc cashback on their debit card with selected retailers.
Perfect for: students who are likely to remain in credit - a £2,000 balance earns £60 in a year. The railcard is worth about £100.
Avoid: if you're unlikely to be able to pay £500 a term because you won't be eligible for the perks, or if you might accidentally go into your overdraft.
2) Nationwide FlexStudent
The Nationwide student current account also offers interest, although it's less than Santander.
Students can earn 1pc on balances up to £1,000 or £10 a year.
Students can get a £1,000 overdraft in their first year, £2,000 in year two and £3,000 in the third.
You must pay in at least £500 per term. There are no unauthorised overdraft fees but if you go into the red the account will be locked until the balance has been returned to the agreed limit.
Perfect for: students who want a sizeable overdraft.
Avoid: if you can pay in £1,000 a month as you might be better off with the Nationwide Flex current account as you will earn up to 5pc credit on balances up to £2,500.
3) HSBC student account
HSBC gives first year students and apprentices a £60 Amazon voucher plus a one-year Amazon Prime membership for students if an account is applied for by October 31 2017. This gives you free one-day delivery on specific items, film and TV streaming and discounts.
It also offers students a generous overdraft.
Everyone who opens the account gets an overdraft between £500 and £1,000. In year two you can request an increase to £2,000 and £3,000 is available from year three. Not everyone will get the maximum amount.
You can also sign up to receive text alerts when your account balance drops below a certain amount.
Perfect for: if you think you'll need the maximum overdraft and have a good chance of getting it. Or if you'll make use of the Amazon perks.
Avoid: if you want to earn interest on your savings.
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4) Barclays Student Additions
The main draw of the Barclays is the cashback it offers on spend with over 150 retailers.
For example, customers who use online or mobile banking can earn 6pc on hotel bookings, and 3pc on hotel and flight bookings on Expedia. Other retailers also include Waterstones, Office and Adidas.
Students can also opt into Barclays Blue Rewards. Those who set up two direct debits earn £3.50 a month and if you can pay in £800 a month you get another £3.50 - so £7 a month in total.
The bank also offers free text warning alerts if your balance is low, to help with budgeting.
Students can also send and receive money using just a mobile number or Twitter handle with Barclays Pingit. Barclays will also allowed students to send international payments to over 35 countries for free - this is only for a limited time.
A £500 fee-free overdraft is available from the account opening. This can be increased to £1,000 in the first year of studying, £2,000 in the second year and up to £3,000 is available in the third year.
If a transaction is returned unpaid, customers will be charged a fee of £8 for each returned transaction - this is a maximum of one a day.
Perfect for: someone who finds it difficult to keep on top of their finances, so would benefit from the text alerts and who would make the most of the cashback (without going overboard).
Avoid: if you're expect your bank to offer a switching bribe or in-credit interest.
5/6) NatWest/RBS
Both banks offer a National Express coachcard which gives holders one-third of coach fares for four years. A three-year card usually costs £25 to buy.
Students can apply for a £500 overdraft in the first term, and up to £2,000 after that.
You won't be able to borrow more than your agreed overdraft and if you reach the limit and a payment bounces back NatWest and RBS will charge an "unpaid transaction fee" which is £8 per payment. This is limited to one payment every 30 days.
Perfect for: if you'll regularly be travelling home by coach.
Avoid: if you don't trust you'll keep within your borrowing limits.
7) Lloyds Bank student account
Lloyds offers students who open its account a free NUS card, which entitles the holder to high street discounts, worth £32. You'll need to apply between August 1 and October 31 to get the offer.
An interest-free overdraft of £500 is available in your first six months, increasing to £1,000 after seven months, and £1,500 after ten months.
If you're studying for longer than three years, you can ask for the overdraft to be increased to £2,000.
From November, the Lloyds group, is simplifying its overdraft feature. Current account holders, including students, will pay a daily overdraft fee of 1p for every £7 borrowed over the fee-free amount. Unarranged overdraft fees will be abolished.
Students can benefit from up to 15pc cashback from "Everyday Offers" when they spend on their Lloyds debit or credit card with retailers such as Morrisons and Superdrug. You must be registered for online banking.
Lloyds also sends out text alerts when you're getting close to your account limit or when your balance is getting low.
Commission-free currency and travellers cheques are also available to customers but the rate may not be the most competitive.
Perfect for: students who want a no frills account but may need text alerts to keep track of their finances.
Avoid: if you need a bigger overdraft or expect your bank to offer a switching bribe.
8) TSB student account
A small £1,500 free overdraft is made up for by a 5pc interest on balances of up to £500, paying up to £25 a year. If you go over your overdraft, you will be charged 8.21pc interest plus a £6 monthly fee.
Perfect for:those who want to earn a top interest rate on small balances.
Avoid: if you're likely to need a larger overdraft.
9) Halifax student account
Halifax pays 0.1pc in-credit interest and offers free mobile text alerts to warn you when you're getting close to your account limit.
If you need a bigger overdraft and arrange it with Halifax, it currently charges 7.2pc. Unarranged overdrafts over £3,000 will have a rate of 24.2pc applied.
From November, the overdraft feature is changing in the same way as with the Lloyds student account.
Students who sign up for online banking are then eligible for Halifax's "Cashback Extras" which offers up to 15pc cashback with retailers, including clothes stores, DIY outlets and restaurants. The Hilton, Morrisons and Superdrug are all currently involved in the scheme.
Halifax offers travel money without taking commission - but check the rates as you may get a better deal elsewhere.
Perfect for: those want a simple account and could benefit from the cashback on offer.
Avoid: if you a higher rate or interest.
10) Bank of Scotland
The Bank of Scotland offers an interest and fee-free overdraft of £1,500 in your first to third year.
In months one to six, a £500 overdraft is on offer which can be increase to £1,000 after seven months. In month 10 to 12, students can ask the bank for a £1,500 overdraft.
Those studying for four or more years can increase the borrowing amount to £2,000.
Students can earn up to 15pc cashback with the retailers involved in Bank of Scotland's "Everyday Offers" scheme.
Bank of Scotland also offers 0pc commission on all foreign currencies and travellers cheques but compare the rate on offer as it might not be the most competitive.
Perfect for: students who don't require much by way of overdraft and could earn decent cashback.
Avoid: if you think you'll need a larger overdraft.
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