My task this week is to find a first bank account for a young relative just turned 18. It’s proving to be quite a challenge. At 18, you’re too old most child current accounts (17 is the maximum age for most banks) and don’t (yet) qualify for student accounts.
The attraction of a current account, rather than a savings account, is access to all the latest electronic payment apps. Apple Pay or Google Pay is essential for the teenage lifestyle, I’m reliably informed. (You don’t need to carry a purse or wallet!)
So what’s on offer? The two stand-out children’s options include TSB Under 19s, for which you can apply at age 18. It pays 2.5% on balances up to £2,500 and there’s £75.99 off driving lessons with the AA. There’s also the 123 Mini Santander account for children aged 13 to 18. This has 3% interest on balances from £300 to £2,000 and cashback from various retailers. There are others but they tend to pay less interest. NatWest Adapt for example pays only 1% on cash balances. All three allow Apple and Google Pay.
I’ve a feeling though that these accounts might be regarded as babyish. Getting a student bank account now would also be preferable to starting a child account and having to switch later. But student accounts require evidence of being a student by providing the relevant UCAS codes. We don’t have these as the universities haven’t handed out any offers yet. So that leaves us in the arms of basic or standard current accounts.
There are so many available, it’s hard to pick one. A trip to Money Saving Expert’s best buy tables will take you through the best account if you want the highest rate of interest, the best if you’re frequently overdrawn and the top options for other criteria. You might also want to make sure there’s a branch in your local area too.
I was spoiled for choice until Mr Minted came up with a radical idea: we should get a standard account with the bank that offers the best student account. That way, when the all-important UCAS codes become available, an upgrade to a student account should be a cinch.
On that basis, HSBC comes out top. Both Money Saving Expert and Save the Student rank its Student account the highest. This no 1 place relies on the fact that students need large loans, so the more you’re allowed to borrow, for the lowest interest rate, the better. HSBC allows a 0% overdraft of up to £1,000 (guaranteed) in the first year and up to (ie they decide how much to lend depending on if you’ve been well-behaved) £2,000 in the second year and £3,000 in the third. Accounts from Nationwide and Santander are close contenders.
We could of course just wait until a university place is confirmed (some months away). But that would mean losing valuable time to sort out teething troubles at home: important because being unable to balance a budget is a prime reason for dropping out in the first year of uni. I’ve booked an appointment already. HSBC, here we come!
See our SMM guide to student accounts for more help.