From free cash to 'pizza evenings' with branch managers, the fight is on for the graduate pound

Student banking deals have become so generous that some students who play the system this autumn could walk away with nearly pounds 200 of free cash and travel cards.

The big banks have once again increased the financial value of the special deals offered to students, while conceding that in practice there is little to stop someone from signing up with the competition as well.

Individually, the most generous deals are for around pounds 50 of cash for signing up as well as interest-free overdrafts running to as much as pounds 1,600 for three- year courses. But a student who manages to sign up with all of the "big four" banks - NatWest, Barclays, Midland and Lloyds - could pick up a tidy total of pounds 185 cash plus pounds 10 of cinema vouchers, as well as thousands of pounds of interest-free credit. And someone who exploits the choice of incentives on offer from some banks could end up even better off. With Midland, for example, students get a choice of pounds 50 cash or a Young Person's Railcard valid for four years. The railcard would cost pounds 16 for this year alone.

Last year the same trawl around the big four might have yielded pounds 155 and pounds 10 credit on a BT Chargecard.

Banks generally require proof of student status and a chunky deposit to open accounts and release incentives. But with many students being supported by parents and the availability of student loans to fund new accounts, banks say it is difficult to be sure they are the only institution with that student as a customer. "Gone are the days of one grant cheque [as the only source of income]," says Jenny Loynds, head of student banking at Barclays. One bank estimates that over half of students now have more than one active account.

The better-than-ever new deals (see table) are on offer to the 1.5 million existing students as well as the 270,000 going to college for the first time this autumn. But while the freebies may be the initial attraction for many students - particularly "freshers" - the real value will usually lie in their interest-free overdrafts and preferential terms for additional loans.

Barclays, which claims the biggest share of this market, says its student customers owe an average of pounds 414 to the bank - a figure which it claims is lower than that for students with the other major banks and which is on top of student loans and any other debts. Nevertheless, at normal overdraft rates, interest on even this relatively small amount might come to pounds 80 or more a year.

Barclays offers the highest interest-free overdraft limits for standard three-year courses, limits that it has increased by around 20 per cent this year. It is also among a number of banks that have introduced even higher interest-free limits this year for students on five-year courses. These now range up to as much as pounds 2,000 with NatWest.

NatWest is also making much of the educational element of its student banking deal this autumn. Students who sign on at one of the 46 campus branches will be given an extra pounds 15 upfront, but they will also be offered a range of initiatives that encourage them to budget and manage their money better, from leaflets to "pizza with your bank manager" evenings in local pubs. The programme follows research by NatWest suggesting widespread ignorance among soon-to-be students about how they will manage financially. For example, in a survey earlier this summer of school leavers going on to college, nearly two-thirds said they did not expect to have to borrow money at all. In practice, three-quarters of students have ended up with debts.

None of this is meant to be charity, of course. Banks have long offered special deals for students on the premise that they will be the high earners of the future who can eventually be sold a range of financial products. That and the surprising number of people who stick with the same bank after graduation justifies preferential deals that can be worth hundreds of pounds to students compared with normal accounts, say the banks.

Although students are not locked in by these deals, perhaps two-thirds have not moved five years on, according to one estimate. Moreover, the fact that many new students will not already have a bank account makes it easier to attract them at this age rather than later on.

One important point for students to note is that the overdrafts on offer are not automatic; they need to be requested, and agreed in writing. As well as interest-free overdrafts, most banks offer very favourable terms on additional overdrafts that are authorised. But interest rates on unauthorised additional overdrafts can be a punitive 30 per cent-plus and there may be fees on top.

This month's Which? magazine names Halifax and Midland as its "best buy" student accounts, although the Halifax offers no upfront incentives and the best financial deal overall will depend on your debts, if any.

In addition, whatever the apparent financial allure of individual deals, students will ultimately want a bank with a convenient branch and cashpoint network - and this will depend on where they go to study.

STUDENT BANKING DEALS

Bank Freebies Interest if Interest-free Additional in credit o/d (1st to 3rd yr) authorised

o/d rate

Barclays pounds 25 + pounds 10 cinema 2% pounds 1,100 - pounds 1,600 8%

vouchers+ pounds 25 credit

on Barclaycard

Halifax none 4% pounds 500-pounds 1,000 6.2%

Lloyds pounds 30 or pounds 20 + 3-year 1% pounds 500-pounds 1,000 7.4%

National Express coach

discount card

Midland 4-year Young Person's 2.2% pounds 750-pounds 1,250 8%

Railcard or pounds 50

NatWest pounds 35 (pounds 50 if you sign 2% pounds 1,000-pounds 1,000 9.3%

on at campus branch)

TSB pounds 50 of Our Price 3% pounds 500-pounds 700 6.25%

discount vouchers

Life and Style
A teenager boy wakes up.
life
Life and Style
It is believed that historically rising rates of alcohol consumption have contributed to the increase
food + drink
Life and Style
fashionEveryone, apparently
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
art
Life and Style
Playing to win: for Tanith Carey, pictured with Lily, right, and Clio, even simple games had to have an educational purpose
lifeTanith Carey explains what made her take her foot off the gas
Arts and Entertainment
The White Sails Hospital and Spa is to be built in the new Tunisia Economic City.
architectureRussian billionaire designs boat-shaped hospital for new Dubai-style Tunisia Economic City
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
music
Sport
Husain Abdullah returns an interception off Tom Brady for a touchdown
nflLeague has rules against 'sliding to ground on knees'
Arts and Entertainment
Critics say Kipling showed loathing for India's primitive villagers in The Jungle Book
filmChristopher Walken, Bill Murray, Scarlett Johanssen Idris Elba, Andy Serkis, Benedict Cumberbatch, Cate Blanchett and Christian Bale
Life and Style
tech
Extras
indybest
Life and Style
food + drink
News
i100
News
i100
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Arts and Entertainment
film
Finacial products from our partners
Property search

Simon Read: The timeshare battle intensifies with Macdonald Resorts

An action group of disaffected Macdonald owners are now readying for their own legal battle with the company

Debt problems: How you can nip your money problems in the bud and sleep easy at night

Money worries are keeping more than 7 million of us awake at night

Venture Capital Trusts: You will love the tax-free income

To encourage investment in this higher-risk area, the Government offers generous tax relief to those who invest in new issues of VCT shares

Runaway debt: It's the new norm for university students now

StepChange, the debt charity, has revealed that students who called its helpline in 2013 had racked up average debts of £7,818

Michael's crisis could have 'dragged on for a long time', says CPA adviser Ruth Millward, right

More than 300,000 adults are too deeply in debt to apply for bankruptcy

Charities are urging the Government to offer a cheaper alternative for people in financial difficulty

Scottish independence: How will kilt-edged stocks fare?

Scottish companies were caned when the separatists surged in the polls. Is this the future, asks Simon Read, and would they be any better together?

Two million first-time buyers are locked out

The drought in lending to people with low deposits has created legions of frustrated buyers, writes Emma Lunn

Leaving money to charity in your will could help reduce the tax bill for your loved ones

Next week has been designated "remember a charity in your will week", to put the focus squarely on the subject
Money is slipping through our fingers: the UK is falling behind other countries in the amount we put away

How to save money: UK is crashing down the European league table for putting money away

The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options

Energy firms found guilty of bad practice could have licences revoked under Labour government

Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator

A student's guide to financial survival: You don't have to drown in debt at university

Fresh from A-level delight, the moment does not have to be soured by students resigning themselves to thousands of pounds worth of debt in three years' time. Rob Griffin sees how to pass the university challenge

'Dismal' eurozone data sparks concerns

European Central Bank chief Mario Draghi is under pressure to launch promised stimulus before the EU slides further
Love but not marriage: property is one area where cohabiting couples are in danger of losing out

How couples can protect their financial interests when cohabiting

People who simply live together cannot assume they have the same rights to each other's assets as spouses or civil partners. Michelle McGagh sees how they can protect their financial interests
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    SQL Developer (Stored Procedures) - Hertfordshire/Middlesex

    £300 - £330 per day: Ashdown Group: SQL Developer (Stored Procedures) Watford...

    Day In a Page

    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?
    Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

    Homegrown ballerina is on the rise

    Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
    Education, eduction, education? Our growing fascination with what really goes on in school

    Education, education, education

    TV documentaries filmed in classrooms are now a genre in their own right
    It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

    It’s perfectly reasonable to negotiate with villains like Isis

    So why don’t we do it and save some lives?
    This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

    Is a sub-2-hour race now within sight?

    Dennis Kimetto breaks marathon record
    We shall not be moved, say Stratford's single parents fighting eviction

    Inside the E15 'occupation'

    We shall not be moved, say Stratford single parents
    Air strikes alone will fail to stop Isis

    Air strikes alone will fail to stop Isis

    Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
    Witches: A history of misogyny

    Witches: A history of misogyny

    The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
    Shona Rhimes interview: Meet the most powerful woman in US television

    Meet the most powerful woman in US television

    Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
    'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

    Endangered communities photographed 'like Kate Moss'

    Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style