With A level results announced this week, students will soon be busy sorting their university arrangements for the autumn, and that includes opening a student bank account.
The banks are keen to attract the potential high flyers of tomorrow with one eye on signing them up for their profitable insurance, pension and mortgage products in later life.
The big high street providers have released details of their student account packages for this year and as usual are offering an array of incentives in an effort to win the custom of the new intake of 2015.
However, the most important element of a student bank account for most people will be the ability to borrow as much money interest free as possible.
So even though gift cards and money off deals may sound tempting, the following numbers should convince you to give the freebies a wide berth.
If you can borrow an additional £1,000 interest free, you would save around £154 every year compared with a Lloyds Bank student account which charges interest at a rate of 8.2% EAR plus a £6 monthly fee.
That adds up to considerable saving over the course of your time at college, more than £600 over four years, and far outweighs the value of any incentives on offer.
Halifax and HSBC offer the largest interest free overdraft limits of up to £3,000, but be aware that both are subject to application and not granted automatically.
Also some of the banks will limit how much you are able to borrow each term, particularly in the first year.
Whichever bank you choose, make sure you don’t go over your interest free limit as you could end up paying hefty charges which you can ill afford on a student budget.
The only possible exception to the rule regarding incentives and one offer that maybe worth a look again this year comes from Santander.
New Santander student customers are eligible for a free four year 16-25 Railcard which cuts student rail fares by a third, a benefit that could prove a big money saver if you plan to use the train frequently to get to and from college.
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