HERE ARE THE BEST ALTERNATIVES TO A STUDENT BANK ACCOUNT FOR GRADUATES

It’s a no-brainer for students up and down the country when sorting out their finances before university – get a student current account.

The deals are impossible to argue with, with many banks offering fantastic offers to young people headed into higher education. These include free four-year railcards and interest-free overdrafts up to £3,250.

However, these offers can dry up a little when students leave university.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “While you’re studying, banks will offer you unbeatable deals – not least a free overdraft. However, once you’ve graduated, they’ll usually move you to a graduate account, which is much less generous.”

It can be demoralising to see freebies and generous interest-free overdrafts whittling away after graduation, but this does not mean the door to great offers has to be closed for good.

So, with many university students currently finishing their final exams, The i Paper runs through some of the best bank account options on the table for those who have recently left university or are about to do so.

Switch incentives

You do not have to keep your account with the same provider after you leave university.

Several banks offer customers incentives to move their current accounts to them.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Current accounts can offer free cash to encourage customers to switch to them, and there are a few banks currently trying to entice new business.”

There are several banks offering cash for you to switch your account to them.

First Direct offers you £175 to switch to it currently, while NatWest offers £150.

Cashback offers

Other banks will pay you long-term cash back on your spending with them.

Ms Springall said that customers can find good deals that may pay off more in the long run than a switch bonus for certain customers.

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“Consumers could still find cashback on spending, or for paying bills, and savers could stand to earn a decent return on a high interest current account,” she said.

In terms of cashback offers, Barclays’ Current Account is eligible for their Blue Rewards, a charge of £5 per month which includes a free Apple TV+ subscription and up to 15 per cent cashback with selected retailers.

Many other banks offer cashback on their current accounts.

The NatWest Reward account, for example, comes with a £2 per month fee, but you get £5 per month cashback when you pay in £1,250, payout 2+ Direct Debits of £2+ and log into its mobile banking app each month. So the net gain is £3 per month or £36 per year.

It is worth bearing in mind that many charge a standard monthly fee, and terms differ between banks, so it is worth having a look for which one would offer the best deal for you.

Savings interest

Some current accounts also offer savings interest – and these can be even better than savings accounts – up to certain limits.

Tom Allingham, student money expert at Save the Student, told graduates to prioritise saving: “The reality is that life in 2025 is expensive, and saving for a rainy day is always a good idea. By all means, treat yourself, but keep at least some cash to the side.”

One way to make your income work towards improving your savings is to have your salary go straight into a high-interest current account.

The Nationwide FlexDirect account offers 5 per cent interest for one year, as long as £1,000 or more is paid into it each month.

This is similar to the top savings accounts on the market, but it only pays it on up to £1,500 in the current account – maxed out this is £75 in interest.

Credit builder cards

Though not a bank account as such, Ms Springall suggests that people in their 20s, who might want to take out a mortgage at some point in the future, may benefit from getting a credit builder card to help boost their credit score.

When applying for loans or a mortgage in the future, lenders may assess your credit history using your credit score.

“You might need to apply for a credit repair card to borrow a little bit of money and pay it back to demonstrate how you can manage debts,” Ms Springall said.

“It may seem an odd concept, but lenders look more favourably on consumers that have proven they can pay back debts, compared to those who have never borrowed before,” Springall added.

While it can be a good idea to start building up your credit score, experts also urge people to make a realistic assessment of their ability to make consistent repayments every month.

Ms Coles said: “Don’t be tempted to use a credit card to make ends meet, even if you can get a 0 per cent deal. The debts will mount and land you in hot water later.”

“However, if you know you can trust yourself to use a credit card sensibly and pay it off in full each month, it can be a good way to build your credit record,” she continued.

Reward cards

Reward credit cards, which allow customers to build up points to get cashback, vouchers, or airline tickets, can be a good option for those looking to get more out of their spending.

Ms Coles said: “If you’re totally trustworthy with a credit card, you can opt for a reward card and make money or points from your spending.”

Moneyfacts found that American Express offers two good options at the moment, with their Cashback and Cashback Everyday cards.

Ms Coles warned, though: “You need to be absolutely certain you will always be able to pay in full and on time. Otherwise, you can very quickly lose more than you ever gained from the cashback.”

Many supermarkets offer reward cards which allow you to accrue points and get money off when shopping at their branches.

Moneybox found that ASDA, John Lewis, and M&S all offer these cards with no monthly fee, so if you have a favourite place to get your weekly shop, these could offer good rewards.

As with all the options outlined here, checking the conditions and charges associated with any account, especially credit cards, is important.

This not only ensures you are capable of repaying your overdraft each month but also allows you to find the best deal for your circumstances.

2025-05-09T05:54:05Z