Most students are basing their choice of current account on the perks they get when opening one, or because a family member banks with the same provider.
Seventy per cent of the 1,000 students surveyed by Which? selected their current account for these wrong reasons. Perks, such as railcards and travel insurance, are not worth as much to students as a decent interest-free overdraft. Exceeding an authorised overdraft limit could result in bank charges that dwarf the value of the perk.
Best student accounts
Halifax and Bank of Scotland offer an interest-free overdraft of up to £3,000 for first-year students. Barclays offers £2,000, while the other big banks offer less. Having a larger interest-free overdraft can help limit the cost of going into debt, but Which? found that just one in five students chose their account for this reason.
Perks don’t work
Which? current account expert Jo Langenhan said: ‘Students should select bank accounts based on overdrafts rather than incentives. Students can expect to end up thousands of pounds in debt at the end of their studies, so anything they can do to limit this is a must.’
To see how banks compare on student accounts see the Which? Student bank account guide.
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