Students advised to consider overdraft options Financial Times
However, interest rates on overdrafts and balances vary widely. Some student accounts offer generous interest-free overdrafts, while others have more punitive rates for those who exceed their budget – and only a handful pay interest on credit balances.
HSBC’s student bank account will pay 2 per cent on money held for the first year, and Santander’s account pays 1 per cent on the first £500 deposited. By contrast, Halifax pays just 0.1 per cent on money held.
Halifax’s authorised overdraft is more generous, points out Paul Lawler at moneysupermarket.com. It will allow students to borrow £3,000 over the course of a degree without paying interest. HSBC also offers interest-free overdrafts of up to £3,000. Barclays, The Co-operative Bank and Lloyds TSB will let account holders borrow up to £2,000 interest free.
Yorkshire Bank, in contrast, is far less competitive in the student account market. It offers neither free tickets or vouchers, nor an interest free overdraft. Instead, it charges students 7.49 per cent on debts up to £3,000.
