As new students prepare to start their first university term, Which? Money has rounded up some of the biggest interest-free overdraft offers out there – along with smallprint pitfalls to watch out for.
If your outgoings are likely to exceed your income when you’re at university, then an interest-free overdraft should be your top priority when choosing your student account – over and above a free railcard or other enticing freebie.
But don’t ignore the smallprint when you’re comparing accounts – some of the interest-free overdraft offers aren’t always so attractive on closer look.
For more advice on managing your money while you’re at university, head to the Which? University website.
Biggest interest-free overdrafts
Halifax and HSBC offer the most generous headline overdrafts, with up to £3,000 available interest-free to students in their first year.
Barclays, Natwest and The Royal Bank of Scotland price-match their offers, with up to £2,000 of fee-free cash up for grabs.
A lower value overdraft is advertised by Ulster Bank (NI) at £1,000, while The Co-Operative Bank offers £1,400 for first-years.
We’ve compared 13 student bank accounts to help you weigh up what’s available.
Check the overdraft smallprint
If you think you’ll need an interest-free overdraft, make sure you’re aware of any limits or restrictions to this facility. Barclays entices new students with a £2,000 overdraft facility, for instance, but only £200 of this is actually available in the first term.
Similarly with Natwest and RBS, you’ll only get your hands on £500 of your overdraft in your fresher’s term.
Halifax advertises a £3,000 overdraft limit, but you’re only guaranteed £1,000 of this during your time at university – anything more will be subject to application and approval.
Don’t be sold on freebies
Banks usually try to tempt new students to take out an account with them with a whole host of perks. This year’s offering includes a four-year railcard from Santander and a £60 Amazon voucher from HSBC.
It’s worth seeing what’s out there, particularly if the freebie is something you’ll actually use – but you need to weigh up the value of the giveaway against the interest-free overdraft on offer if you think you’re going to be using it.