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17 Aug 2019

Revealed: the best and worst student bank accounts for 2019

Which bank is best for undergrads?

Nationwide and Santander have been rated the best student bank account providers for the second year running by a Which? survey of thousands of undergraduates, while other providers failed to impress.

Choosing a student bank account might not be top of your to-do list if you're off to university this September, but we've done the legwork for you, and chosen the best and worst student accounts for 2019-20.

Find out how providers have been ranked, what perks are on offer and how to choose the right account for you.

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Which? top picks: Nationwide and Santander

While it's tempting to simply go for a bank offering the best freebies, other factors are just as important. We gathered feedback from real students to generate a Which? customer score.

After surveying 1,563 university undergrads between March and April 2019, we chose Nationwide and Santander as Which? Recommended Providers (WRPs) for student bank accounts.

Nationwide FlexStudent

This time around, Nationwide came out on top with a customer score of 77%. It earned the best rating for customer service, and students raved about its online and mobile banking too.

Nationwide told us that it offers the maximum interest-free overdrafts for each year - £1,000 in year one, £2,000 in year two, and £3,000 in year three - as long as students don't have credit problems and they stick to the account requirements.

To qualify for this overdraft, you will need to pay in at least £500 a term from the date the account is opened (this can include your student loan, money from family members or any other income).

Nationwide doesn't charge unarranged overdraft fees. If a payment does take you over your limit, it may not go through until you top up your balance.

Keep in mind that from April 2020, no providers will be able to offer unarranged overdrafts, so other banks are likely to scrap them in coming months.

Santander 123 Student

Santander was very close behind, with a customer score of 76%. The big draw is a free four-year 16-25 Railcard, which normally costs £90.

The bank also pays interest on credit balances at 1% AER from £100, 2% from £200 and 3% from £300 to £2,000.

It only earned an average three out of five stars for other aspects of its service, though, including online and mobile banking.

The interest-free overdraft limit is set at £1,500 for years one to three, but this is not guaranteed.

First, Santander will assess your eligibility on an individual basis based on your credit score, so you may get a smaller limit. Second, you must pay in at least £500 per term to increase the overdraft limit from £250 to £1,500.

Don't use this account for additional borrowing, as Santander charges an eye-watering £5 a day (capped at £50 a month) for unarranged overdrafts.

The worst student accounts

Barclays, Royal Bank of Scotland, NatWest and Lloyds achieved the lowest Which? customer scores in our latest survey. That said, the sample size was too small to rate TSB this time, which ranked at the bottom of our table in 2018.

NatWest earned a dismal two stars for its branch service and achieved only average marks for telephone banking, complaints handling and overall customer service.

Students with a Barclays Additions account were disappointed with the lack of sign-up incentives, and although both online and mobile banking were highly rated, it fell short in every other area.

Read our full analysis in our guide to the best and worst student accounts.

Student bank freebies

Several student bank accounts come with freebies and other incentives. This shouldn't be your focus but could sway your decision once you've factored in the overdraft and customer ratings:

  • HSBC is offering £100 cash if you open the account by 31 December 2019, plus a free one-year British Cycling Fan membership (worth £24).
  • Santander is giving away a four-year 16-25 Railcard worth around £90, plus you earn 1-3% interest up to £2,000.
  • NatWest and RBS accounts include a four-year National Express Coachcard worth around £40 (three-year Coachcards cost £30 and one-year Coachcards cost £12.50).
  • Lloyds and Bank of Scotland are offering three-year Totum cards (the new name for NUS Extra) if you open your student account by 31 October 2019.
  • Nationwide pays 1% interest on balances up to £1,000.
  • TSB pays 5% interest on balances up to £500.

Switching student bank accounts

You don't have to stay with the same provider for the duration of your course. All of the accounts we compared are signed up to the 'switch guarantee', which means you can transfer your student account in just seven days.

Before you switch, check that your new bank will match your current 0% overdraft, and ask if you will be accepted on the same terms as other students in that year of study.

Most banks won't let you open a student account if you already have one with another provider (more on this in our student banking guide).

However, you can apply to open an additional standard current account. Many digital bank account providers, such as Monzo, Starling and N26, let you open an account without a full credit check.

Find out more:Digital challenger banks - manage your finances from a smartphone.

How to manage your money as a student

Getting your bank account set up is just one step towards managing your finances as a student.

You'll also need to think about how to make your student loan stretch throughout the year. You can use our budgeting calculator to factor in cost of living at universities around the country. We also have plenty more advice on student finance at Which? University.

And once you graduate, you'll need to start thinking about clearing your overdraft debt. We give nine helpful tips in our guide to clearing your student overdraft.