Student and graduate bank accounts

Moving on to higher education? You’ll be entitled to open a student bank account. Once you’ve completed your studies this can get upgraded to a graduate account, offering new rewards and incentives. Read our guide to learn the main differences between accounts, understand which is best for your banking needs and how to make the most of this budgeting tool, both during and post-student life.

Current accounts

The type of bank account you use for everyday banking needs is a current account.

Nearly everyone is eligible to open a current account, which usually includes a range of standard features:

  • Overdraft facilities
  • Debit card/ cash card
  • Internet and phone banking
  • Online or printed statements
  • Interest on the money in the account
  • Ability to set up direct debits and standing orders

Student accounts


Charges on your overdraft are changing from April, but some banks are introducing these changes earlier. Find out more about what these changes mean for you.

The main difference between current and student accounts is the overdraft facility.

Some student accounts allow overdrafts of up to £3,000, interest free.

This means that you don’t have to pay interest on anything within the authorised overdraft limit while you’re a student.

But remember, this isn’t free money. After you graduate you still have to repay everything you have borrowed.

The overdraft limit set by the bank when you open an account with them might be an ‘up to’ amount, increased only by agreement during the time that you’re a student.

If you go beyond your authorised overdraft limit additional charges might apply.

You should speak to your bank immediately, if you think that this is likely to happen, as it could hurt your credit rating and ability to borrow in the future.


When it comes to student accounts, competition between banks and building societies is high.

Because of this, some offer ‘freebies’ in addition to overdrafts to tempt you into opening one of their accounts.

For example, one incentive offered is a free 4-year 16-25 Railcard (not available in Northern Ireland). You can use it to get a third off train tickets, and it will also save you money on TfL off peak fares.

Despite the name, the 16-25 Railcard is available to all full-time students in higher education.

While freebies can be a nice bonus, don’t let them affect your decision.

Make sure the bank account you choose offers all the features that you need.

Managing your budget through your student account

Use our quick and easy Budget planner to stay on top of your money.

The majority of payments you make and receive will be done through your student bank account.

You should set and stick to a realistic budget, to stay within the authorised overdraft limit that you’ve agreed with your bank.

Opening more than one student account

There are a few reasons why you might decide to open more than one account:

  • to manage your budget more effectively. For example, paying accommodation fees with one account and using another for daily spending
  • some students open more than one account to take advantage of the free overdraft facilities on offer

Don’t forget: having more than one account means that you run the risk of getting into debt. Be sure to keep a close eye on your finances.

Credit cards with student accounts

Some banks offer credit cards that are available alongside student accounts.

These cards usually have fixed and relatively low credit limits.

While credit cards can allow you to make bigger, one-off purchases to help with your studies you shouldn’t see them as a replacement for daily spending.

If you miss a repayment, even the minimum, you’ll receive penalty charges and may damage your credit rating.

Making payments through your student account

Online and mobile banking allows you to make payments more easily.

The service ‘Paym’ allows payments between people who have registered their mobile numbers.

Keep track of any payments you make so that you stay within your authorised overdraft limit.

Banking safely

Here are some tips to help you manage your account safely and prevent fraud:

  • Always shield your PIN at cash machines.
  • Try not to use shared computers or tablets to access online banking.
  • Regularly check your bank statement to make sure there are no errors.
  • Never store your Personal Identification number (PIN) with your bank cards.
  • If you use internet banking, make sure the security software is up to date on your computer, smartphone or tablet.
Learn more on protecting yourself with our beginner’s guide to scams

Be aware

There have been reports of young people being targeted by scammers over social media.

  • Watch out for offers of “free money” that seem too good to be true. You could be handling money used for drugs, people trafficking or terrorism.
  • Don’t share your bank details with strangers, and never let anyone else have access to your accounts.
  • Report any suspicious messages to Action Fraud and if you think you might have already been scammed let your bank know.

Read our blog about money mules for more information.

Choosing between a student or graduate account

Comparison websites are a good starting point for anyone trying to find a current account that matches their personal banking needs.

Check out the following websites for comparing current accounts:


  • comparison websites won’t all give you the same results, so make sure that you use more than one before making a decision
  • it’s important to do some research into the type of product and features you need before making a purchase or changing supplier

Moving onto a graduate account

Generally, once you finish university or college your bank will turn your student account into a graduate one.

The main reason is to reduce the overdraft amount, that you might have built up during your time as a student.

After graduation, ask your bank the following questions:

• What deals do you have on graduate accounts?

• Will I have my overdraft limit reduced? If so, when?

• When will I start to be charged interest on my overdraft?

• Will I be automatically upgraded to a graduate account?

These accounts still provide generous overdrafts, but the amount of interest-free borrowing tends to reduce each year that the account is open.

Use this as an opportunity to manage and balance your budget after graduation.

Choosing the right graduate bank account for you

If you opened a student account at the start of your course, it’s likely that it’ll be turned into a graduate account with the same branch, after you graduate.

Consider the following when looking for the right bank account for your needs:

  • Never go over your overdraft limit.
  • Don’t be loyal to your current bank – shop around!.
  • Go for the longest 0% interest overdraft that you can find.
  • Focus on the associated perks of opening with a particular bank.
  • Check your credit rating before you apply for a graduate account.
  • Budget to clear off your overdraft as soon as possible (if you have one).
Can you find a better deal? Learn How to open, switch or close your bank account.

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