Best student savings accounts 2019

Forget sticking your money under the mattress and hoping for the best – if you want the biggest bonuses, you need the best savings account. Here are the smartest ways to save.

While we can’t promise shed loads of extra cash by the end of your first term, a high-interest savings account can net you no-effort earnings on any spare cash you might have.

Interest rates in the UK may not be at their best right now, but we know of accounts which can earn you as much as 5% interest on your savings. And, as some accounts only ask for £1 to open, you don’t have to wait until you’re earning big money to get started.

All recommended accounts in this guide are protected by the Financial Services Compensation Scheme (FSCS) so your money would be safe if anything happened to the bank.

So whether it’s money from a part-time job, birthday cash from your folks or Student Loan leftovers, you can put it to good use with these savings accounts.

Things to do before opening a savings account

Before you decide which savings account to go for, there are five important things to think about:

  1. Work out what sort of saver you are

    Be realistic about the kind of saver you are. Are you someone who struggles to stick within budgets and often needs to dip into emergency funds, or can you afford to stash some cash away and not touch it for a few years?

    Get too ambitious at this stage and you could end up losing all your interest if you have to withdraw early, so it’s important that you’re honest with yourself before choosing which account to go for.

  2. Make sure your savings are protected

    Thanks to the Financial Services Compensation Scheme (FSCS), any money (up to £85,000) you put into a savings account will be protected if everything goes down the pan at the bank which holds your money.

    You’ll get your money back within seven days if the bank goes bust, and the process is automatic so there’s no need to claim.

    So whichever bank you pick, make sure they’re backed by the FSCS.

  3. Don’t get taxed

    The ‘savings starter rate’ means that you don’t have to pay tax on your savings’ interest until your total income (of your salary and interest) is £5,000 above the income-tax threshold of £12,500.

    As your first £1,000 of interest on savings is also tax-free, you won’t need to pay tax on your savings until the combined income of your salary and interest is over £18,500.

    Note: If you have a higher Personal Allowance (e.g. you receive the Blind Person’s Allowance), your minimum total income before paying tax on savings will be adjusted accordingly above £18,500.

    Most students won’t earn enough interest in the year to get taxed on their savings, but that doesn’t stop banks automatically nipping the tax off before paying interest – make sure you watch out for this.

    You can always ask for it back or, to save the hassle, make sure you fill out a R85 form when you open your account so all interest is paid in full.

    Alternatively, if you’re in it for the long haul (e.g. planning on saving long-term for a deposit on a house or something similar) go for a tax-free ISA or Lifetime ISA instead.

  1. Try an automatic savings app

    If you struggle to commit to saving cash regularly, it’s worth looking into an automatic savings app.

    These apps work by squirrelling away cash into a virtual savings bot on your behalf – sometimes a couple of quid, sometimes the price of a meal, depending on how much its software has calculated you can spare.

    You can find the best automatic savings bots and apps in our guide.

  2. Be prepared to switch for more interest

    Nintendo switch

    Some instant access savings accounts tempt you in with generous interest rates that include a one-year bonus, or a variable rate that can plummet faster than the pound after the Brexit vote (ha… politics).

    Being savvy with your savings is all about staying in the loop. Keep an eye on interest rates, because unless you go for a fixed-rate option, these will fluctuate. And, if you find a better rate elsewhere – switch!

    Make sure you keep an eye out and switch when the rates drop (bookmark this page so you can come back to it when it’s time to find a new account).

    It’s your money, so make sure you’re getting the most from it.

What kind of savings account should you get?

There are loads of savings accounts to choose from, and each one has its own benefits.

Note that if you’re earning £17,500 or more a year, you’ll pay tax on any interest you earn above £1,000.

If you’re not working, or your total taxable income for salary and interest is below £18,500, you won’t pay tax on savings at all. Keep an eye on this, and if the bank accidentally taxes you when you’re earning below that amount, make sure you claim for a refund.

If you’re worried about getting taxed on your savings, an ISA would be your best bet. More on this below.

Main types of savings accounts to choose from

The main decision you need to make at this point is: will you need access to your savings instantly, or can you bear to lock them away safely for a year or more to earn some decent interest? If the latter, you can get better rates with a fixed-rate savings account.

If you’ve got a regular income, you could grab the best rates by going with a current account.

Best instant access savings accounts

This section has the best instant access savings accounts for students. Easy access accounts generally pay reasonable interest and allow you to access your money whenever you need it.

Another major bonus is that they have a very low minimum deposit amount. Just make sure to ditch and switch when bonus rates disappear after 12 months.

Top instant access savings accounts

  1. Marcus by Goldman Sachs – 1.5%

    Marcus Savings Account

    Minimum deposit: £1

    Access: Online

    Withdrawals: Unlimited

    This savings account made the front pages of a few newspapers when it was announced, and there hasn’t been a better percentage on an easy access savings account for a long time.

    0.15% of the interest is a bonus that will only last for 12 months, but if you log into your Marcus account click on ‘Review your savings’ within this time, you’ll be able to renew your bonus for an additional 12 months.

    Open a Marcus account »

  2. RCI Bank Freedom Savings Account – 1.35%

    Minimum deposit: £100

    Access: Online

    Withdrawals: Unlimited

    RCI Bank has a decent amount of interest but the £100 minimum deposit amount might put a few students off (even though you can withdraw down to £1 straight after).

    And, fun fact: RCI Bank is owned by the car company Renault.

    Open a Freedom account »

  3. Coventry Building Society Easy Access (Online) (3) – 1.2%

    coventry building society best easy access savings

    Minimum deposit: £1

    Access: Online

    Withdrawals: Unlimited

    The Coventry Building Society Easy Access (Online) (3) account is a great choice for most students as you can open it with just £1.

    You can make as many withdrawals as you want, whenever you want, simply by transferring the money to a nominated bank account.

    You will need to open and manage the account online (more info via the link below).

    Open an Easy Access account »

  4. Post Office Online Saver – 1.38%

    Post office logo

    Minimum deposit: £1

    Access: Online

    Withdrawals: Unlimited

    Not only do you get unlimited withdrawals on this account, but you can also choose if you want your interest paid monthly or annually.

    The account’s rate includes a 1.13% gross fixed-rate bonus for 12 months but, after the first year, the interest rate will drop to just 0.25%. So, once a year is up, it’s definitely worth going back to the drawing board and shifting your cash to another easy access saver.

    Open an Online Saver account »

Best fixed-rate savings accounts for students

If you can afford to put some money away for a while, you’ll make the best interest on your savings with a fixed-rate account.

Just make sure you can actually afford to stow this cash away – some banks will take away your interest completely if you withdraw early, or even charge you a fee.

Please note that the interest rates mentioned below are the maximum you can get, and getting the highest possible rate will often mean committing to locking your cash away for up to five years.

Top fixed-rate savings accounts

  1. Masthaven – Up to 2.35%

    Masthaven bank logo

    Minimum deposit: £500

    Withdrawals: One to five years

    Interest paid: Annually or monthly (you might get a slightly lower rate if you choose monthly)

    But, you should only go with Masthaven if you’re in this for the medium to long haul.

    Stow your cash away for one year and you’ll get 1.85% – slightly higher than Atom (below). But if you want to choose a term any shorter than a year (like Atom’s three- or six-month accounts), Masthaven wouldn’t have any fixed-term accounts to offer you.

    Early withdrawals are not permitted with a Masthaven fixed-rate saver, so only sign up to this if you’re totally sure you can spare the cash for a year or more.

    Open a Masthaven account »

  2. Atom Bank – Up to 1.9%

    Atom Bank logo

    Minimum deposit: £50

    Withdrawals: Three months to five years

    Interest paid: Annually or monthly (you might get a slightly lower rate if you choose monthly)

    Atom’s one of the earliest app-based banks to launch in the UK.

    The amount of interest you receive depends on how long you’re willing to save your cash for, and whether you prefer to have interest paid monthly or yearly.

    Additional deposits aren’t possible and early withdrawals aren’t permitted with Atom Bank. Therefore, you need to be 100% sure you can afford to save your cash before you commit.

    If you just wanted to put your money away for a few months, a three-month term currently has 0.8% AER, and for six months its 1.51% AER – but please note that the gross interest rate for six months is slightly lower than its AER at 1.5%.

    A one-year term has an interest rate of 1.8% AER on your cash, and two-, three- and five-year terms are all 1.9% AER.

    Open an Atom account »

Best combined current and savings accounts

If you’re sensible with your cash – and self-disciplined enough to have your savings sitting in your current account – you could earn double the interest than a traditional savings account can provide by choosing a current account with an attached savings pot.

The only condition is that you must pay in a set amount every month to these accounts, ranging from £500 to £1,500. This could be from a part-time job, your Student Loan or parental support, but for the average student this would probably still be a challenge.

However, if you do happen to have a chunk of savings in an instant access savings account you could set up a standing order to deposit cash from there each month so you benefit from the higher interest – and remember, you can transfer money out of these accounts whenever you need it!

Top combined current/savings accounts

  1. Nationwide FlexDirect – 5%

    Nationwide logo

    Minimum you have to pay in each month: £1,000

    Access: Online

    Withdrawals: Unlimited

    With this account, you’ll get a whopping 5% AER fixed interest on balances between £1 and £2,500 (no interest paid on anything above that) for the first year.

    The catch is you need to deposit at least £1,000 each month to retain the rate, and not from another Nationwide personal account.

    After 12 months, the interest rate will drop to 1%.

    Open a FlexDirect account »

  2. TSB Classic Plus – 3%

    TSB bank logo

    Minimum paid in each month: £500

    Access: Online

    Withdrawals: Unlimited

    With TSB, you can get 3% AER variable interest on your entire balance up to £1,500, which is less than with Nationwide. But, this account has a lower minimum amount to pay in each month so there’s a bit less pressure.

    To get this deal, you need to register for online banking, register for paperless statements and correspondence, and log in regularly.

    There’s also the option of a £35 overdraft that’s interest and fee-free. It’s not the biggest overdraft, but it could be a nice little buffer to have if you’re struggling to make it to the next payday/Student Loan day/all-round-good day.

    Open a Classic Plus account »

Already thinking about saving for your first home? The Lifetime ISA could see you benefit from a 25% bonus from the government.