Mukund Hari Nathany
UK Student Banking 101
Updated: Dec 21, 2020
Mukund Hari Nathany breaks down the various options available to students for saving, storing, managing and spending their money.
People say money can't buy you happiness. One might or might not agree with the saying, but at the very least, let us try to be happier about the way we manage our money. So be it receiving money from your parents abroad, paying rent or splitting bills with a friend, I have got you covered.
What is a bank?
Technically, there are several different types of banks, from the central banks which print our currency, to the investment banks which help businesses raise capital through financial markets (or in other words, the places where most freshers want to go for a spring week). But for the purposes of this article, I will explore the most common type of bank which you may already know about — retail banks (also commonly referred to as consumer banks). These are the banks with branches commonly found in the city, which provide current and savings accounts, loans, credit cards, deposits, etc. to the general public.
So, what about the ‘online banks’?
According to The Balance, online banks operate online entirely; there are no physical branch locations, which means there are no branch tellers or personal bankers either. Examples include Starling Bank and Monzo. However, not all ‘online banks’ are actually banks in strictly legal terms. For example, Revolut mentioned in their blog that, 'Legally speaking, we are an electronic money institution. We are authorised to handle money, facilitate business transactions and currency exchanges, but we cannot offer certain financial services; such as the FSCS deposit guarantee. We don’t handle cash or cheques or offer phone assistance. We don’t have brick and mortar branches, we don’t call ourselves a traditional bank.' At the time of writing, Revolut intends to obtain a UK banking licence.
What is the ‘FSCS’? Is my money safe?
FSCS stands for the Financial Services Compensation Scheme. According to their website, “If you hold money with a UK-authorised bank, building society or credit union that fails, we’ll automatically compensate you up to £85,000 per eligible person, per bank, building society or credit union.”
However, electronic money institutions such as Revolut safeguard funds with a ‘bank’, and are obliged to comply with e-money regulations.
What are my options?
Students have multiple options for their banking needs in the UK. We can separate these options into two types, traditional banks and online/digital-first services, and compare their offerings. Online services do not tend to have student-specific offerings, unlike traditional banks. The following table compares student accounts of traditional banks, and the general accounts offered by online services.
Please note that the above list is not exhaustive in any manner. Remember to do your own research before making a choice. There is no single ‘best’ account to open. Every product has its distinct advantages, which may be more or less important for different people.
HSBC Student Banking Current Account Opening
HSBC International Services Overseas Account opening
Barclays Student Banking Current Account Opening
Santander Student Banking Current Account Opening
Lloyds Bank Student Banking Current Account Opening
NatWest International Student Bank Account
Starling Bank General Bank Accounts
Monzo General Bank Accounts
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