Students need a supportive bank behind them but choosing one can be difficult and it's tempting to simply sign up for whichever is offering the best freebies.
Remember that banks want students - they know that if they sign you up now, they're likely to keep you once you're a high-potential graduate.
Unlike normal current accounts, you're only allowed to open one student account so make sure it's the right one. So what really makes a difference to students and what should you look out for ahead of fresher's week?
Kevin Mountford, head of banking at moneysupermarket.com, said: "You'll see all sorts of incentives such as free railcards, discount vouchers and other freebies - these are useful but shouldn't be the sole reason to choose an account. An overdraft becomes a fact of life for many students so look to see how those compare - most of the big banks offer interest-free overdrafts. If you'll be fortunate enough not to need to borrow in this way check out the rates paid on balances in credit. It may sound boring but look at the overall offer and see which account is most suitable for you. It may also be worth seeing which banks have branches on campus or near the university as they'll have specialist advisers trained to help students."
Most students fund their university years through parental help, student loans and part-time jobs, but many will also rely on an overdraft to get them through.
It's never been harder to qualify for credit but most banks are sympathetic to students' needs. The Halifax Student Current Account has a maximum interest free overdraft of £3,000, while Royal Bank of Scotland (RBS) offers £2,750.
That doesn't mean that you can just open the account and spend that much cash. Every application is considered individually and will be affected by your credit rating. You may well have to work out a budget planner with a personal banker.
Usefully, many student accounts tier their overdraft facilities. You may not think it but this is a feature worth taking advantage of - it means you can't blow your full overdraft in your first year and end up broke by summer.
NatWest, for example, allows you to apply for an interest-free overdraft of £1,250 in your first year, rising to £1,400 in year two, £1,600 in the third year, and if your course is longer than three years, you can borrow up to £1,800 in year four and £2,000 in the fifth year. To help account holders budget, it even breaks that down term by term, usually limiting the overdraft to £500 in term one, £1,000 in your second term and £1,250 for your summer studies.
Although many students accept that they will end up in debt, a lucky few won't - whether because they are being supported by a parent or a partner, or because they have an income of their own.
If you're in this privileged position, then don't assume you need a student account. There are competitive current accounts on offer, like
Alliance & Leicester's Premier 21. This pays out 5% on balances of up to £1,000 in the first year and 1% after that.
There's also a 0% interest overdraft of up to £2,000 - although they charge 50p a day for a maximum of ten days a month. So, if you do rely on your overdraft, you won't pay more than £5 a month for the privilege.
Of course, there are specific student accounts that pay interest if you're in the black. HSBC pays 2.00% on up to £1,000 in your first year but 0% once you're no longer a fresher. Abbey has a more long-term rate of 2.00% up to £500 but just 0.1% on anything above that amount, and RBS pays out 1.02% on balances in credit.
As a student, most of your banking will be face-to-face. If you want help managing your money, you'll probably make an in-branch appointment with a student advisor.
So make sure that your bank is easy to reach and open at times that fit your needs.
Banks pile their accounts with freebies to try and attract new student customers.
You shouldn't choose your current account based on these incentives alone, but they are worth considering.
NatWest, for example, has a very generous offer. Students signing up for its account receive a five-year railcard worth £130, which could save them a small fortune when they go back home or visit friends.
Those opening an account with Abbey will receive £50 cashback and it's also offering the chance to win an additional £50. From 24 August, anyone who signs up to Abbey's Student Account fan page on Facebook will be entered into a prize draw and every hour in September, it will give away another £50.
Even with the most supportive student account in the world, managing your money successfully as a student comes down to budgeting.
Try to keep your spending under rigid control - you'll be happy you did so once you're a graduate looking for work.
Plan your spending on a yearly, termly and then weekly basis, and you'll avoid living on economy beans in the weeks before your next loan cheque.
How the student accounts from the main providers compare:
Credit Interest Rate (AER)
Maximum interest-free overdraft
£1,250 year 1
£1,400 year 2 £1,600 year 3 £1,800 year 4 £2,000 year 5
Free 5-year 16-25 Railcard worth £125;
Discount card offering up to 20% off at selected retailers; £100 off Asus Laptops; £10 worth of credit plus USB modem for £19.99 from 3 Mobile; Free USB memory stick.
(up to £1,000 in first year of university) 0% thereafter
£1,000 year 1
£1,250 year 2 £1,500 year 3 £1,750 year 4 £2,000 year 5
2 years free worldwide travel insurance if a lump sum of £250 is credited to the account between 1st August and 31st October 2009;
Special deals on computers available with Dell; Discounts on music and DVDs available with cdwow.
Royal Bank of Scotland
Apply now: Students in England and Wales
£100 off Asus Laptops;
£10 worth of credit plus USB modem for £19.99 from 3 Mobile; RBS Payment Card Protection; 25% off gigs and shows; Discount card offering up to 20% off at selected retailers; 2-for-1 cinema tickets at Vue Cinemas; 10% off flights and holidays booked through Royalties membership services; Free USB memory stick.
Royal Bank of Scotland
Apply now: Students in Scotland
£100 off Asus Laptops;
£10 worth of credit plus USB modem for £19.99 from 3 Mobile; RBS Payment Card Protection; 25% off gigs and shows; Discount card offering up to 20% off at selected retailers; 10% off flights and holidays booked through Royalties membership services; Fare-free bus travel for a month Railcard -1/3 off rail fares for three years; Free USB memory stick.
(up to £500) 0.1% thereafter
£1,000 year 1
£1,250 year 2 £1,500 year 3 £1,800 year 4 £2,000 year 5
£50 cashback when account is opened.
Exclusive Orange Mobile Broadband offers;
25% off AA membership;
20% discount on Card Care insurance; Commission free foreign currency and Travellers Cheques; All Student benefits are available for 12 months after course ends.
£1,500 years 1, 2 & 3
£2,000 years 4, 5 & 6
Free NUS Extra Card;
Commission free travel money and non-sterling American Express Travellers Cheques; Save up to £75.99 on driving lessons with The AA; Free YHA membership for a year; 35 free music downloads from eMusic; Free text alerts, Internet and Telephone Banking.
Sourced by http://www.moneysupermarket.com/ 30.07.2009
Please note: Any rates or deals mentioned in this article were available at the time of writing. Products underlined can be applied for directly.
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