This year's students are being feted like never before by the banks, with pounds 50 signing-on fees and interest-free overdrafts of up to pounds 1,600. Students who play the system and open accounts with all the "big four" could walk away with nearly pounds 200 of free cash and travel cards.
Banks say they offer these deals to attract and keep customers who are potential high-earners and who they hope can then be sold mortgages, pensions and the like. But now a bank is specifically aiming to attract people who are already high earners (those paid pounds 30,000 or more) with a telephone- based service that also comes with the offer of a return flight to Paris.
The bank, US-owned Citibank, has only a handful of branches in the UK, all in London, but offers 24-hour free telephone banking, free use of most of the UK's cashpoint network and, for paying in cheques, free use of Lloyds Bank branches.
"We're targeting upmarket professionals," says Jatin Patel, the group product manager.
Citibank's current account features a pounds 500 interest-free and fee-free overdraft as well as interest of 4.75 per cent on credit balances over pounds 2,000. The pounds 500 free overdraft could save pounds 100 or more compared with some bank accounts.
The deal also appears to compare well with even the most well-known telephone banks. Like First Direct, for example, it does not charge for most normal banking services, but it also pays higher interest and has at least as good access.
The bank, which has been operating current accounts in the UK for three years, used to have a pounds 10 monthly fee on accounts whose average balance fell below pounds 2,000, but that has now been dropped whatever your balance. Now there appear to be no real catches. Its interest rate on agreed overdrafts is an unexceptional 14.7 per cent a year but unlike many banks there are no additional monthly fees for being overdrawn. If, however, you go overdrawn without agreement you will be stung by a high rate of 41.2 per cent.
The Paris flight offer was running over the summer but is being extended exclusively for Independent on Sunday readers. To take your flight you have to pay airport tax of pounds 12.80 and take out travel insurance (at pounds 13 for a weekend) but this still represents cheap travel. You will also need to keep pounds 2,000 in your new account for 30 days as part of the offer, although thereafter there is no requirement to keep a specific balance or even keep your account open. Moreover you do not have to have your (pounds 30,000+) salary paid in to the account, so you can run it alongside an existing bank account.
Citibank also offers a range of foreign currency accounts that could be useful for people travelling abroad a lot, free PC banking, and even a facility to access accounts via Psion electronic organisers. Account- holders who introduce other customers also qualify for pounds 50 of free vouchers with M&S, Harvey Nicholls, Austin Reed or Jaeger. New customers brought in this way also get pounds 50 of vouchers.
Peter Simpson, the commercial director at First Direct, the original telephone bank, which now has 760,000 customers, conceded that the Paris offer was "pretty good". But he appeared unworried that First Direct would lose out from Citibank's challenge. First Direct continues to offer new account-holders pounds 15 cash for signing up. Similarly Rowan Gormley, the managing director of Virgin Direct, which is considering launching a telephone bank next year, claimed that assuming Virgin went ahead it would be able to offer a better deal, particularly on interest when in credit. Citibank pays 4.75 per cent on balances of more than pounds 2,000 but just 1 per cent on lower balances. He said many professional people did not have an overdraft, so the real benefit of a pounds 500 interest-free overdraft might not amount to much. And referring to the Paris offer, he added: "Going after smart people with gimmicks is an ultimately futile strategy." Virgin, he said, will make a decision on whether to go ahead with its bank later this year.
q For Citibank, call 0800 008800, quoting reference "13 Paris".