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