If your child is off to university, they can arrive on campus hundreds of pounds better off by snaffling perks offered by banks eager to win the loyalty of a new cohort of students.
This year a battle has erupted between the banks – and to entice new customers they are offering fee-free overdrafts, cash bonuses and freebies such as railcards.
Experts say there’s nothing to stop new students opening one account and switching to another once they’ve received their gifts. Money Mail explains how…
Perks on offer
Banks offer cash and other incentives to lure in students, knowing most will remain loyal for years.
There are hoops to jump through to get the best perks, and a few require you to keep the account open for the long term.
Smart move: Experts say there’s nothing to stop new students opening one bank account and switching to another once they’ve received their gifts
Top cash incentives include £100 from Nationwide and Lloyds.
Santander also offers a significant perk, a four-year 18-25 railcard worth £115 as well as £20 in cash, via a prize draw that will see one student winning £100,000.
In addition to £100, Nationwide is giving out Just Eat vouchers that can be redeemed for takeaways or food delivery.
Students will get £10 a month of these vouchers for the first year, and can receive an extra £40 for referring friends (£20 per friend).
Lloyds has a similar deal with Deliveroo, where £15 vouchers are offered for the first six months.
NatWest is giving out a TasteCard worth £80 a year, which offers dining and cinema discounts.
Show me the money
Students who grab all these perks will be more than £300 better off and hold a TasteCard and railcard worth almost £200, but they need to follow a strategy.
Instead of opening all the accounts at the same time, open one, wait for the cash, then switch to a new provider for another bonus.
Use the official seven-day current account switching service (CASS), which means the switch is managed by your new account provider. Direct debits and any existing balance will be moved over automatically.
Some student accounts state in the terms and conditions you should have only one student account at a time so make sure you check first and stick to the rules.
Kara Gammell, of MoneySupermarket, warns: ‘Opening multiple accounts at the same bank, providing false information during application or trying to game the system can backfire, affecting credit records or getting accounts closed.
‘You’ll need a bank code from your UCAS portal to open any student account. You can switch accounts at any time during your course, but not all banks offer these perks to second or third year students so check the T&Cs.’
To receive the maximum number of perks, open student bank accounts in this order:
Step 1 – Nationwide’s FlexStudent
Open this account. Deposit £500 (you can remove it almost immediately if you like).
Receive £100 cash within ten days and £30 of Just Eat vouchers if referred by a friend – £10 if you are not.
Time taken: Ten days (max).
Step 2 – Santander Edge Student
Switch the Nationwide account to Santander using CASS. Wait for postal login details for online banking.
Login to receive a code for your free railcard worth £115. Download this to the railcard app.
Time taken: Seven days, depending on postal service.
Step 3 – NatWest student account
Simultaneously with Step 2, open the NatWest student account – no switching involved this time.
Receive a link to download your TasteCard within five days, receive £85 cash within ten working days.
Time taken: Ten-12 days.
Keep this account open.
Step 4 – Lloyds student account
Now switch the Santander account using CASS into the Lloyds one so you don’t end up with too many accounts open.
Pay in £500. Wait until November 30 for Lloyds to pay you £100. For bonus Deliveroo vouchers make 20 payments with your debit card to receive £15 of vouchers the next month.
Time taken:p Over a month (account must be opened by October 31 and money paid by November 30).
Step 5 – Choose your long-term student account
If you follow this strategy you’ll now have two student accounts – NatWest and Lloyds.
Once the Lloyds money is paid in, close this one and keep the NatWest account, which has one of the most generous student overdraft packages.
An alternative route is to start with NatWest, switch this to Santander for the railcard, and then to Nationwide for the £100 in cash. Open the Lloyds account simultaneously and wait for the money.
Then close the Lloyds account and stick with Nationwide, which has a generous overdraft offering and also offers £10 a month of Just Eat vouchers to sweeten the deal.
Perks: Banks offer cash and other incentives to lure in students, knowing most will remain loyal for years
Get the best account for you
Remember there is more to student bank accounts than the perks on offer.
If you follow the steps above you’ll end up with either the NatWest or Nationwide account, but please ensure that it is the right option for you as once you’ve spent the perks you’ll be left with the account for the rest of your university years – and perhaps even beyond.
Check the other features to make sure you pick the best account for you – taking into consideration online banking and budgeting tools, and reviews for customer service in case something goes wrong and you need help.
Tom Allingham, of money website Save The Student, says an overdraft is the most important part of any student banking experience.
‘It’s one of the safest and most accessible forms of extra cash at uni,’ he says of the free borrowing, which is typically paid back gradually after graduating.
‘Compared to the sign-up incentives available – even the chance to win up to £100,000 – having as big a safety net as possible is always going to hold more value.’
Santander offers £1,500 in the first three years, while Nationwide’s free overdraft limit rises from £1,000 in year one to £2,000 in year two and £3,000 in year three
NatWest offers one of the most generous overdrafts, with up to £2,000 in the first year (though just £500 in the first term) and up to £3,250 from year three.
Student overdrafts may be generous, but go over the free limit and you’ll face fees.
Alice Haine, from DIY investment group Bestinvest says: ‘It’s important to understand how financial behaviour in your student years can affect your future.
‘Bad habits, such as exceeding your overdraft limit, can damage your credit rating, which lenders use to assess eligibility for products such as credit cards, mortgages or car loans.’
If you don’t need the free overdraft initially, Andrew Hagger, money expert at Moneycomms.co.uk, says you can take it one step further by funding a high interest easy-access savings account with the free cash.
‘For example, £2,000 with Spring at 4.3 per cent or Charter Savings at 4.31 per cent would see you earn £7.16 per month in interest,’ he says.
If the money is in an easy-access account you will be able to access those savings as soon as you need them.
