With A-level results out in just over a week the banks are on the hunt. They are all announcing new student bank accounts loaded with freebies in an effort to tempt the next generation of current-account users through their doors. So how do you choose who gets your overdraft?
 
The first and most important thing to remember is that you must all ignore the freebies. Whether it’s insurance for your laptop or a shiny new railcard, a freebie shouldn’t be the reason you choose a bank account. Take the mobile phone, gadget and laptop insurance offered by Santander. Most students can have their belongings covered on their parents’ home contents insurance; you just need to check with your insurer.

The five-year railcard that NatWest is offering is the most tempting freebie available at the moment. But a railcard only costs £26 a year, so there still isn’t much point in taking it unless you really think NatWest has the best account on offer too. Get the wrong account, and you can run up overdraft charges of over £26 in a matter of hours.

The truth is that what most students need to concentrate on is the level of interest-free overdrafts on offer. Unless you are very lucky indeed, you are going to go into debt at times while you are studying. You need to make those times as pain free as possible.

Where to get the biggest overdraft

Halifax offers the potential for the largest interest-free overdraft. Apply for their Student Current Account and you’ll automatically get a £500, 0% overdraft -  you can then apply to have it raised to up to £3,000. Obviously, the problem here is that you might not be approved for the larger loan. The other drawback to this account is that if your bank account is in the black you earn just 0.1% interest. You may not think this is a problem, but if you ever have large amounts of cash in your account – perhaps when your student loan payment has just come in – the more interest you can earn the better.

The two accounts with the best interest rates

The best account overall is Santander’s University Student Account. It offers a £1,000 interest-free overdraft in the first year, rising to £2,000 over five years if your course lasts that long. But it’s the in-credit interest rate that makes this account stand out from the crowd. They pay 5% on balances up to £500. The downside is you can only apply for the account if your university is a member of Santander Universities. There are 37 members, see if your university is one of them here.

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