Choosing a student bank account 2017
When starting university and living away from home, you will very likely be opening a new bank account. This is especially so for international students like me, but even to those who already own a UK account, student bargains can be quite beneficial. I will try to guide you to understand each offer correctly and make the choice which suits you best.
I am using the comparison table on this webpage as reference, so I advise you to keep both pages open in order to keep track. I would have liked to add the whole table here, but the file was a bit too big… Sorry about that.
In credit interest is the interest the bank pays you on the amount of money saved in your account on a certain day of the month. (Check this beforehand) Many accounts have none at all. HALIFAX have 0.1%, which is near nothing. Santander’s 3% up to £2000 is quite good. But TSB’s 5% up to £500 may be better because this account is meant for regular usage and not for savings.
Overdraft is the amount of money you are in debt to the bank. This means your account is in the negative.
0% overdraft/arranged overdraft is the amount of overdraft you can have without paying interest. A bank may advertise as “0% overdraft up to 3000£” but this usually comes with conditions such as “exactly 500£ in the first year, up to 1500 in the second, up to 3000 in the third, all depending on your personal records”. So, check twice.
Unarranged overdraft fee is a fee you must pay when you exceed your maximum overdraft. This is handled quite differently from account to account, but I advise you not to choose based on the numbers here, as it only applies if you exceed your arranged overdraft and this is something you should strictly avoid anyway. Personally, I would avoid any overdraft at all…
Incentive is the advertising point of the bank account. It can be a gift card, railcard etc. Don’t get too caught up in them. For example, getting 5% interest in TSB for two and a half years can add up to more than the £60 Amazon gift card from HSBC.
Using this knowledge, compare the different 2017 offers in the table and see what fits your own specific needs best. As reference, this is how I came to my conclusion:
I will never, ever spend more than I have at that moment in my own account, so I can disregard both the arranged and the unarranged overdraft. I definitely want some in credit interest, which leaves me with Santander, Halifax, Nationwide and TSB. Of these, I drop Halifax and Nationwide, because their interest rates are far lower than the remaining two. Between Santander and TSB:
I would gain more from TSB if I only put my monthly allowance in and waited until the savings built up. However, once I reach a permanent, untouched £500, I will only get +£2.08 (500*0.05/12) per month. At Santander, it would take me longer to save up but I can reach a maximum of +£5 (2000*0.03/12) per month once I reach £2000. On the long run, I gain more. Also, if I put £2000 worth of my current savings in the Santander account from the beginning and do not touch this money, I would get the +£5 from the beginning all the way through.
And so, I will be creating an account at Santander.
I hope I could help some other freshers out there, and have fun at university!