The best student bank accounts for 2022

·3 min read
a-level results day which is best bank for student accounts 2022
a-level results day which is best bank for student accounts 2022

It is not long until the first restriction-free university courses for two years will begin and another generation of freshers will have to navigate student life, including financial pitfalls.

As ever, banks are keen to tempt thousands of young people, many of whom will become customers for life. Several banks and building societies have increased free cash offers, interest-free overdrafts and discounted rail cards. However, some deals have worsened, according to Moneyfacts, an analyst, with some reducing overdraft limits or removing perks entirely.

So what are the best deals on offer?

Nationwide Building Society and HSBC currently offer the most generous interest-free overdraft allowances of up to £3,000, while Barclays has slashed its limit in half – from £3,000 to £1,500.

The bank has, however, relaunched free access to Perlego, an online library, for 12 months. Moneyfacts estimates the deal could save students £96 a year in expensive textbooks not available cheaply or free in their own university libraries.

HSBC has also increased its free cash incentive from £80 to £100, but no longer offers a £20 UberEats voucher or unlimited next-day delivery with Asos Premier. Students will also be able to open a "regular savers" account through the bank if they wish.

NatWest has increased its upfront cash offering from £50 to £80 since last year and provides students with Tastecard, a scheme that provides food discounts mainly on high-street chains. TSB continues to offer a student credit card interest rate of 5pc AER. Moneyfacts described the rate as "generous". The average credit card rate is about 22pc.

Those hoping to save money on travel receive a discounted railcard if they open an account through Santander, which, according to the bank, can save them £636 on average over the course of the four-year offer.

A study from Equifax, a credit reporting agency, showed 49pc of university students and graduates said that the prospect of student debt made them think twice about taking up their place at university. Student "loans" are a different kind of debt and is better understood as a graduate tax. Unlike other types of loan, you only begin making repayments once you earn a certain amount (currently £27,288 a year) and debt is wiped entirely after 30 years whether or not it is paid back.

Rachel Springall, of Moneyfacts, said students should be wary of large overdrafts, as they eventually have to be paid back.

“Finding the right student account is crucial, which is why students must compare the whole package of any account to ensure it suits their needs,” she said.

“In the months to come creating a budget is wise, especially on the go, and there are free ways to make this easier such as using apps like Money Dashboard.

“Those struggling would be wise to speak to their family and friends for advice and remember that any overdraft they borrow will need to be paid back.”