Students get fresher treatment at Barclays: Interest-free overdrafts are on offer, reports Lee Rodwell

TO WOO disgruntled students away from other banks and building societies Barclays Bank is offering special terms often only available to freshers.

Existing students - even those with overdrafts - will be offered the full Barclays student package, including the pounds 10 Our Price Music voucher, if they transfer their account before the end of May.

Students who wish to transfer their overdrafts to Barclays will be eligible to apply for an interest-free overdraft of up to pounds 400 and can apply for further loans at a preferential rate.

John Cheese, personal sector marketing director, says that research carried out by Barclays indicates that many students banking with competitors are unhappy with the service they receive. 'However, some feel trapped because they have an overdraft.'

Certainly, overdrafts are now a fact of life for many students. A recent Gallup poll for the Guardian showed that nearly half of all undergraduates are finding it difficult to pay their way through university. Of those polled, 42 per cent had a bank overdraft or loan and 32 per cent a top-up education loan.

Barclays claims that with its 170 Student Business Officers it is better placed to help students with overdrafts. But will its latest student offer tempt many to change?

Alen Guy already has. A 24-year-old chemistry student at Plymouth University, now in the second year of his degree course, he had a pounds 400 interest-free overdraft with TSB. When it became clear that this would not be enough, he wrote to the branch where he banked, in Nottingham.

'I needed a breathing space to allow me to find some part-time work. I asked what the charges would be if I could extend the overdraft to pounds 600. I also asked about the possibilities of a loan. My mother had said she would guarantee an overdraft or a loan,' he said.

The bank refused both. Alen visited the student welfare office for advice on changing banks, and then decided to approach Barclays armed with his TSB account details, plus a budget setting out his projected expenditure.

'I made sure it was realistic. I even included beer money and pounds 30 for playing squash. I worked out that I would need another pounds 500 on top of the existing pounds 400 overdraft.'

That day Barclays made the arrangements to pay off his overdraft at the TSB and his account was transferred. Alen was given a temporary cheque book and an overdraft facility of pounds 950.

So far reaction from other banks to Barclays' latest offer to students has been guarded. A spokesman for TSB says: 'Students are an important market for us and we are confident we have a leading product for this market. TSB values its student customers very highly and will always try to be as accommodating as possible. However, as with all our credit facilities, we are keen to make sure that our lending is as responsible as possible.'

Barclays has 28 per cent of the student market, Midland 23 per cent, Lloyds 15 per cent and TSB 4 per cent. The market leader, NatWest, with 37 per cent, is watching developments.

A NatWest spokesman said: 'We feel students appreciate the good service they get and won't be tempted to switch - and it's debatable whether students would be tempted to transfer for a pounds 10 voucher.'

Alen has already received his pounds 10 voucher. But he says this was not the reason he moved his account. He says: 'The Student Business Officer I spoke to understood what being a student was all about. In contrast, when I rang the TSB to close my account the assistant manager said he'd arranged for me to talk to the customer services manager about my dissatisfaction in Nottingham in two weeks' time]'