An overdraft can be a helpful way to manage your money at uni. But it’s still a form of borrowing - so it’s important to understand how it works and how to use it safely.

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What is a student bank account?

A student bank account is designed specifically for students and often includes benefits you won’t get with a standard account. These might include an interest-free overdraft and free extras (like railcards or discount memberships).  

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Which student bank account is best?

It depends on what matters most to you. Benefits vary between banks, so it’s worth comparing things like:

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• overdraft limits  

• fees and charges  

• extra perks.  

 
You can compare options using the Money Saving Expert and Save the Student. These are good places to see what’s currently available.  

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What is an overdraft?

An overdraft lets you borrow money from your bank when your balance goes below £0. Many student accounts offer an interest-free overdraft, which means you won’t pay interest on what you borrow (up to a limit).  

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Do all students get an interest-free overdraft?

Not always. Student bank accounts usually offer larger interest-free overdrafts. Standard accounts may offer no overdraft or a smaller limit (e.g. around £250).

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When is an overdraft useful?

An overdraft can help you:

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• cover costs between maintenance loan payments  

• manage short-term gaps in your finances.
   

It’s generally a safer option than high-interest short-term loans - if used carefully.

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What are the risks?

Even if it’s interest-free, an overdraft is still a loan. If you go over your agreed limit, miss payments or rely on it long-term, this can affect your credit score and make it harder to get credit (like loans or credit cards) in the future.  

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What should I do if I’m relying on my overdraft?

If you’re always in your overdraft or struggling to get out of it, it might be time to make a change.

1. Make a budget: Start by looking at what money is coming in and what you’re spending. This can help you spot where things might need to change. You can find more information about making a budget on our website.
   

2. Look at increasing your income: You could consider a part-time job. Find out more information about how to find a part-time job on our website.
   

3. Get extra support if you need it: If you’re struggling financially, there is support available. You could apply to the Success for All Fund or Society Hardship Fund.

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What happens to my overdraft after I graduate?

When you graduate, your account will usually change to a graduate account. This often means you may still have an interest-free overdraft but the limit reduces each year. This is to help you gradually pay it back. This isn’t the same for every bank. You should:

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• check your overdraft terms before graduating  

• understand when you’ll need to start repaying  

• check if interest will be added.
   

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If you don’t, you could end up with unexpected debt building up.

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Should I stay with the same bank?

Not necessarily. It’s worth checking what other graduate accounts offer and whether switching could give you better benefits. Some banks offer cash incentives for switching.  

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Most banks are part of the Current Account Switch Guarantee, which makes switching quick, safe and straightforward. Learn how to switch accounts on the Government’s website. You can find more about switching and comparing accounts through the Money Saving Expert and Save the Student.

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Can the Guild help me?

If you’re worried about money or your overdraft, you’re not alone. We can:

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• help you understand your options  

• talk through your situation  

• support you with budgeting and next steps.  

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Email advice@exeterguild.com or complete our enquiry form.