Best student accounts: the banks that offer railcards, interest-free overdrafts and £100 cash back

School leavers across the country will soon receive their A-Level exam results, and those who have applied to university will find out where they are headed.

For many, managing their student loans will mark their first experience of financial independence.

This is big business for banks, so as the start of the academic year approaches, they are once again scrambling to entice new and returning students alike to open an account with them with a host of new perks.

Last week, Santander launched a prize draw for new Edge Student current account holders, with 20 students in with the chance of winning £27,750 (the equivalent of three years’ tuition) and a further 30 winning £9,250.

Meanwhile, Nationwide is offering £100 cashback and 12 months of Just Eat vouchers worth £120 with its FlexStudent current account.

This is Money picks out some of the best options for students heading off to college.

Best overall student account

Santander Edge Student Current Account

Students who open a current account at Santander between now and September 30 will have the chance to enter a drawing to win three years of tuition.

The main prize of £27,750 (the equivalent of three years’ tuition) will be shared between 20 lucky students. A further 30 students will have the chance to win £9,250 (the equivalent of one year’s tuition).

Santander also offers a free rail card for students aged 16 to 25 who sign up for its current account.

A railcard typically costs £30 a year or £70 for three years. Santander said the average Railcard user aged 16 to 25 saves £192 a year with the card.

Students can also take out an agreed interest-free overdraft of £1,500 in the first to third years of their studies.

Rachel Springall, finance expert at Moneyfacts Compare, said: “One of the most lucrative offers comes from Santander with its Railcard. But not only that, it is now running a prize draw where 20 students could win a large sum of cash to pay for the equivalent of three years’ tuition fees.

‘In addition, customers can sign up to Santander Boosts to receive cashback, vouchers, offers and prize draws from selected retailers, so coupled with the £1,500 interest-free overdraft in years one to three, the Edge Student Account could be an attractive option overall.’

It is worth keeping in mind that any discounts should be used frequently to maximize benefits.

Best Student Overdraft Accounts

This year’s most generous overdrafts come from NatWest, HSBC and Nationwide Building Society.

An arranged overdraft allows students to borrow money (up to an agreed limit) if there is no money left in their account.

Many student accounts allow students to overdraw by a certain amount without being charged interest on the loan.

They can be a useful emergency fund if you get an unexpected bill, for example.

The amount of overdraft a student will get after the first year of study depends on their credit history. You may need to request increases at the end of the year, if they are not automatically increased.

NatWest Student Bank Account

NatWest’s student bank account offers an interest-free overdraft of £500 during the first semester of the first year, which can increase to £2,000 during the second semester of the first year and until the end of the second year. Students can apply for up to £3,250 interest-free from the third year onwards.

Springall said: “One of the most popular features of a student bank account is the interest-free overdraft. This year, NatWest is offering the most generous rate and will also be giving applicants £100 in free cash and a Tastecard as an incentive.”

HSBC Student Bank Account

HSBC’s student bank account comes with a £1,000 interest-free overdraft in the first year, which can increase to £2,000 in the second year and up to £3,000 in the third year and beyond.

Nationwide’s Flexible Student Bank Account

Nationwide’s Student Bank Account offers interest-free, fee-free arranged overdrafts to students up to £3,000 up to their third year.

Students can apply for an overdraft of up to £1,000 in their first year, up to £2,000 in their second year and up to £3,000 in their third year.

Students must pay at least £500 each term, keep up to date with bill payments and stay within the agreed overdraft limit.

Best Student Accounts That Offer Free Money

NatWest Student Bank Account

NatWest is offering students £100 cashback for opening a student bank account. They will receive the cash within 10 days of opening the NatWest student account.

FlexStudent account nationwide

Nationwide is offering £100 in cashback to students who open a FlexStudent account. Students must deposit £500 before 13 December 2024 to get the £100 cashback.

The £100 will arrive within 14 calendar days of payment of the £500.

Students who have already applied for a FlexStudent offer or have a FlexStudent or FlexGraduate account open as of July 15, 2024 will not qualify for this offer.

Best Student Accounts to Get Other Freebies

NatWest Student Bank Account

NatWest offers students an annual Tastecard valid for four years, worth £55 per year.

With this, students can get two meals for the price of one, 50 per cent off the meal bill or 25 per cent off the total bill at thousands of UK restaurants.

FlexStudent account nationwide

Nationwide’s student account includes 12 months of Just Eat vouchers worth £120.

The FlexStudent account is also one of the current accounts eligible for Nationwide’s £100 Fair Share payment.

Students who have this account and at least £100 saved in a Nationwide savings account may be eligible for a £100 payment next year, if Nationwide decides to hand out the cash again.

TSB Student Bank Account

Students can earn 5 per cent interest on the first £500 in their bank account with the TSB Student Account.

No interest will accrue on balances over £500.