What students should really look for in a bank account

Each year banks fight it out to get students to open an account with them, offering free gifts like iPods to tempt them in. Ignore the freebies and check the overdraft deals, says Naomi Caine

Banks seldom want account holders with no money. But each year, the fight over penniless students becomes fiercer, as they bank on future returns from doctors, lawyers and City salaries. Even if you or your student offspring are tempted by the free iPod shuffle from Lloyds TSB, or the MP4 player from HSBC, it's far more important to scrutinise the overdraft facilities as students are likely to spend much of their college life in debt, says Melanie Wright in The Daily Telegraph.

Lloyds TSB is offering students an interest-free overdraft of £1,500 a year for three years. Students would pay interest of 7.4% on anything above that. HSBC will let you have an interest-free overdraft of only £1,000 in the first year. But that increases each year, so might be a better option if you are taking a longer course.

Halifax has one of the most generous interest-free overdrafts, according to Esther Shaw in The Independent on Sunday. You can borrow £1,750 in year one, rising to £2,100 in the third year. NatWest is one of the best. It offers a five-year student railcard (worth about £100) and its interest-free overdraft increases from £1,250 in the first year to £1,400 in the second and £1,600 in the third.

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