Parents' guide to student banking

No, not every student has to open a student bank account. But student accounts are built around university life. They're designed to support students as they budget and build financial independence.

They often also offer benefits that standard adult accounts don't. For example, an interest-free arranged overdraft to help cover short-term gaps in funding while at university plus extra perks or rewards.

Learn more about student bank accounts

A good quality student bank account should meet your child's everyday needs and help them manage their money confidently and safely.

Try to look beyond the short-term incentives. Check things like:

• whether there's a branch near the university where they can talk to someone if things go wrong
• what the mobile banking app is rated, as students often mainly bank on their phone
• whether any fees apply when they spend abroad, especially if they're likely to study abroad
• what the overdraft limits are and what fees apply
• the provider's track record on protecting customers from scams as students can often be targeted by scammers

A student overdraft is one of several ways to borrow money in the short term.

It's a form of arranged overdraft designed for students. Unlike many arranged overdrafts on standard current accounts, student overdrafts are often interest-free. When opening a student bank account, your child can usually apply for an overdraft and choose a limit that suits their needs. If they decide they need one later, they can often apply at a later date and may be able to increase or reduce the limit over time.

It's important to remember that an overdraft isn't free money. Any amount borrowed will need to be repaid, either during university or after graduation, depending on the account terms.

There are also other ways to borrow money such as student loans and credit cards. If your child chooses to borrow money, make sure they borrow responsibly. They should think carefully about how they'll pay it back and read the terms carefully.

Learn more about student overdrafts

If your child opened a student bank account, this usually won't close after graduating. Instead, student accounts will generally change into graduate accounts. This will happen automatically and the provider should let you know.

Graduate accounts are designed to:

• support the transition from student life to adult working life
• help students repay any borrowing gradually over a set period, sometimes up to 3 years

They often offer an arranged overdraft, but the terms will be different from those of the student account.

The cost of going to university is more than just tuition fees and accommodation. Students also need to cover:

• travel
• books and other study materials
• bills, especially if they move into private rented accommodation
• socialising, like eating out or going to events
• likely a laptop

The amount varies significantly depending on where your child goes to university and how they live.

A good place to start is Save the Student's annual National Student Money Survey (opens in a new window). This gives a detailed look at where students typically spend their money.

We also recommend the Government's Discover Uni guide (opens in a new window). This covers how to research and get support with the cost of living.

University is often the first time young people become primarily responsible for their money. Common mistakes students make include:

• not sticking to a budget
• forgetting about some of their bills
• spending too much on socialising

Creating a budget can help your child make their money last and avoid unnecessary stress.

For more information, watch Student Minds' video (opens in a new window) that gives a first-hand look from a university fresher. She discusses managing her finances and creating a budget to balance her costs.

In the first few months after starting university, scammers often target students and their parents.

Common scams include:

• money mule scams – this is a form of money laundering where students are told they can earn easy cash if they allow money to move through their account
• impersonation scams – this is often phishing texts or emails pretending to be Student Finance
• ticket scams – this is where scammers sell fake tickets to popular concerts and events

If you bank with Nationwide, talk to us if you're not sure about a payment you're about to make. We'll look into it and tell you if we think it's a scam – it won't cost you a thing.

Learn more about our Scam Checker Service