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Scoring a perfect score on the student banking survey every year is tough. You have to know the ins and outs of every bank and credit union on campus, all the hidden fees, what the best deals are, where to find the best interest rates, and so on. You also need to be able to quickly read the school’s budget to figure out where to get funding for which projects, and how to avoid the pitfalls of the trickier scholarships. And, of course, you need to keep your eyes peeled for any new and better deals that may come up.
Students have always been a key target market for banks, since many of them are new to the workforce, and are just starting to earn and save money. Some were also likely the children of existing bank customers, and thus were pre-disposed to bank with that institution. The introduction of student banking packages, however, has dramatically increased the number of young customers for many banks, and this has been one of the key factors behind the growth in the banking sector in the 21st century. (This is a particularly important development for many of the large international banks, since the number of potential customers for these banks who are new to the workforce is in decline in many developed nations, a situation that has led to the failure of many large banks in Europe
Whether it’s students’ views on banking, how often they use cash (if at all) or what they really think of BNPL’s services, our Banking for Students 2021 survey has produced some interesting results.
The results of our seventh annual student banking survey are in. They show how pupils’ views and approaches to managing their money have changed over the past year.
With over 1,600 respondents, the study provides insight into how young people manage their personal finances, including which banks and financial services they trust with their money.
Main findings of student banking survey 2021
We will return to the results shortly, but for now let’s take a look at the main findings of this year’s survey of banking students:
- Just over one in ten students are considering switching banks.
- For the first time since we started our bank surveys, a challenger bank is on the list of most popular banks for students.
- The percentage of students who never use cash has doubled since last year, from 6% to 12%.
- Almost a quarter of students who are overdrawn have exceeded their limit at some point.
- One in five students used buy now, pay later services, but some respondents had serious reservations about these services.
How do students choose a bank?
For two of the five students surveyed, their choice of student bank was based on the bank they had previously worked with. However, for almost a third of those surveyed, the free service is a major pull factor – and one of the reasons why they are often advised not to simply stay with their current bank.
When it comes to banking services, it rarely pays to stay loyal to one bank. That’s why we always recommend looking around for the best deals.
Depending on the student’s lifestyle, some banks’ free offers may be more useful than others.
For example, if a student travels by train, even if only a few times a year, they can save money with a 16-25 rail pass. Santander could be a good choice for them in this case, as their student account includes a free rail pass for four years.
Or if a student likes to eat out, they might consider opening an account with NatWest or RBS, which offer trial cards with their student accounts.
Below are the most popular banks for students.
Where do students search for bank accounts?
|Type of investigation
|How many people have used this method
|University or SU
Four out of five respondents searched online for the best student account, and just under two out of five sought advice from their parents.
We believe that young people should receive effective financial advice before they leave school, but unfortunately only a very small proportion of pupils surveyed (3%) received banking advice at their school.
Are students considering changing banks?
As mentioned above, we strongly recommend students to consider other options to access things like freebies to get the best value for their bank account.
But despite the potential benefits, only 12% of students are considering switching bank accounts. This represents a 13% decrease in 2020 and a 17% decrease in 2019, indicating a slight decrease from the previous year.
It is very easy to change banks. We therefore encourage students not to turn down the opportunity to switch accounts. Our step-by-step guide to changing bank accounts explains the process in detail.
What is the most popular bank for students?
As far as the main bank of the students is concerned, the bank most used by the survey participants is Santander (by a fairly wide margin). Just over a quarter of those surveyed have an account with them.
In fact, the generous free benefits and impressive 0% overdraft rate are a major reason why we put Santander at the top of our list of best bank accounts for students.
And for the first time since we launched surveys on student banking, a challenger bank has made the top ten.
2% of students reported using Monzo. While this is a relatively small percentage compared to some traditional banks, it is still an interesting development. We may see more and more students using bank accounts via apps in the coming years.
Indicators of student satisfaction
When we asked students to rate their bank, they were generally very positive – on average, students rated their bank 4.31 out of 5 in the survey.
Since our infographic focused on banks offering student accounts, Monzo was not included. However, it is worth noting that it was rated very highly by users, with an average rating of 4.57 out of 5 (higher than all traditional banks listed above).
How often do students use cash?
Here is a breakdown of how often students say they will use cash in 2021 compared to 2020:
|How often do students use cash?
|Student responses in 2020
|Student responses in 2021
|Change from 2020 to 2021
|More than once a day
|Once a day.
|Several times a week
|Once a week.
|Several times a month
|Once a month or less
In previous bank surveys we have seen a general downward trend in the number of students using cash, but this year the difference was particularly striking.
The percentage of students in the survey who say they never use cash has doubled in the past year, from 6% in 2020 to 12% this year.
We hypothesize that the coronavirus pandemic contributed to a significant decline in cash use by students. Contactless payment methods are more hygienic than cash. Consumers are therefore actively encouraged to use less cash this year.
In addition, the increase in the contactless payment limit from £30 to £45 in April 2020 will make cashless shopping easier than ever.
Ann Boden, founder and CEO of Starling Bank, recently stated that we could become a cashless society in just over a decade. Our surveys of the banks show that students are moving in this general direction.
Habit of borrowing from students
When we look at students’ habits of borrowing money in our student banking surveys, we focus mainly on overdrafts, a form of borrowing often offered at student bank accounts in the UK.
Due to the recent growth of companies like Klarna, Clearpay and Afterpay, this year we also included a Buy Now, Pay Later section in the survey.
Are students overworked?
|Amounts on current account
|Students who received an excessive amount of money
|No debit position
|99 € or less
|£100 – £499
|£500 – £999
|£1,000 – £1,999
|2 000 € or more
Of all students surveyed, only one in five reported having an overdraft – the same percentage as in 2020.
Most student accounts offer interest-free cash loans with no additional fees – with careful use, there is little or no risk involved.
For many students, interest-free overdrafts and payday loans can certainly be used as a source of emergency cash if they run out of money before the next loan repayment.
However, when we began to analyze the statistics of students in overdraft, we discovered some disturbing facts…..
Worryingly, of the students who are in the red, almost a quarter have exceeded their limit at some point.
In addition, 45% of people with overdrafts said they did not know when to repay them. Worryingly, many are unaware of the full terms of their overdraft – a figure up from the 41% who said so in our 2020 survey.
To ensure that students are careful with their credit, it is important that they are well informed about how best to use an overdraft and how and when to repay it.
Our comprehensive guide to using and repaying a student overdraft includes the key points you need to know.
How many students use buy now, pay later services?
BNPL (buy now, pay later) services have attracted media attention in recent years, especially with the recent announcement that BNPL interest-free lending services will be regulated by the FCA in the future.
A minority of students who responded to the survey reported using BNPL sites: 5% used them often and 14% occasionally.
The responses to BNPLs in our survey varied widely – some had positive experiences with them, while others described them as risky or even dangerous.
Here are some comments on the BNPL sites of students who participated in the bank survey:
- This is good in theory, but people can get upset very quickly if they don’t check and understand everything.
- I don’t trust them.
- They’re practical. I used this payment method when I moved and at Christmas when I had to make several payments.
- The wrong way of spending money leads to young people ending up in bad financial situations.
- Useful, but dangerous if you don’t understand it.
- Irresponsible and risky.
- I like them because I don’t have to wait for a refund.
- It’s a slippery slope to debt.
- I think this can be dangerous and encourage dangerous spending habits.
- This could be the end of the world for sensitive people.
- Okay, but it’s easy to overpay without even realizing it.
How many students have a Lifetime ISA (LISA)?
Lifetime ISAs (LISAs) are similar to Help to Buy ISAs, which will no longer be available to new customers in 2019.
People with a LISA can receive a generous 25% annual bonus from the government, up to £1,000, on top of what they save each year, making it an effective way to save for the future.
They are designed for lifetime investments and can only be used if you are buying a home for the first time, are over 60 or are terminally ill and have less than 12 months to live.
With such a high annual premium, it’s amazing how few students take advantage of it.
In our bank survey, 35% of students said they did not know what a LISA was and only 15% said they had one.
For more information on these savings plans and which LISA accounts are best for students, check out our full guide on Lifetime ISAs.
About the Student Bank Survey 2021
- Source: Student Survey Banking 2021 / www.savethestudent.org
- For the study, people between the ages of 17 and 25. In March 2021, 1 630 prospective, current and existing students in the UK were surveyed.
- Want to know more about the survey or need case studies, comments or quotes? We will be happy to help – just send us an email.
This source has been very much helpful in doing our research. Read more about government student survey and let us know what you think.