A degree in banking

Students: financial survival at university can mean weighing political ideals against the leading accounts, and finding funds for foreign study

Best buys among student bank accounts are those from Halifax, Midland and TSB, says the Consumers' Association in this month's Which? magazine.

In making its ratings, Which? says it ignored the freebies on offer - including up to pounds 50 in cash - and instead considered overdraft deals and after-graduation packages.

The point Which? makes is that, given high levels of student debt, low overdraft charges while studying and after graduation can more than cancel out any difference in freebies.

True, but students should also remember they always have the option of switching after graduation or even in mid-study, and may be tempted to do so just because of some of the freebies and incentives on offer.

Student banking packages are very generous by the standards of the deals on offer to the rest of us. And the deals are better this year than ever before - not just in the value of the freebies but in terms of the increased size of interest-free overdrafts: up to pounds 1,500 in some cases. Students also benefit from preferential interest rates on authorised additional overdrafts - in many cases just a small margin above the base lending rate (ABR) of 5.75 per cent.

The banks see students as a long-term investment - catch them now with a subsidy because they will be the high-earning professionals of the future who will then yield the big profits.

The interest paid on credit balances, while in many cases quite good, is likely to prove pretty much an irrelevance for most students after their first flush weeks. On average, students will spend more than pounds 4,000 during this academic year, according to the National Union of Students. That may not sound much but it will still leave many students short; grants and loans amount to little more than pounds 3,500 for the year, less outside London. The average graduate ended university pounds 3,000 in the red this year.

Nevertheless, some students may find they are encouraged to pick their bank on more than purely financial issues. A student action group called Lloyds and Midland Boycott (Lamb), based at Manchester University, is planning a series of protests against these two banks to undermine their efforts in getting students to sign up. Lamb is upset at the amount of Third World debt Lloyds and Midland are still sitting on - more than other UK banks - and also wants to see them adopt more "ethical" lending policies in the future.

Of course, students could simply open accounts with the "unethical" banks, grab the goodies and interest-free overdrafts and then immediately switch to a more "ethical" bank. Or, for the serious freebie collectors, anecdotal evidence suggests that it may even be possible to do the rounds of the banks. Past students claim it is possible to pick up a range of freebies simply by transferring a lump sum from one to the next and telling the bank the money is a parental contribution.

q The National Union of Students has a free guide, 'A Student's Guide to Better Money Management'. Telephone 0171 272 8900.

Midland Bank has produced a free guide, 'Coming to terms with Money', aimed at helping students manage their finances. Available free from Midland branches.

The banks want your business

Freebies Interest if Interest-free Authorised

in credit overdraft overdraft

Barclays pounds 25 & pounds 25 2.00% Years 1-3 1% ABR

with credit pounds 1000-pounds 1500

card

Co-op None 0.12% pounds 500 19.56%

Halifax Free CD 3.10% Up to pounds 1000 6.20%

Lloyds Railcard & 1% Years 1-5 7.40%APR

pounds 20 voucher, pounds 500-pounds 1500

or pounds 30*

Midland pounds 40 & pounds 10 BT 2.23% Years 1-3 1%ABR

chargecard* pounds 750-pounds 1500

Nat West pounds 20 & pounds 15 with 2% Up to pounds 1000 9.30%

credit card

Royal Bank None 2.90% Years 1-3 3-6%ABR of Scotland pounds 600-pounds 1000 (negotiable)

TSB pounds 30 voucher 3.00% Years 1-3 6.25%

pounds 500-pounds 700

* Incentive offers available only to freshers.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
Arts and Entertainment
Jay Z has placed a bet on streaming being the future for music and videos
music
Arts and Entertainment
Festival-goers soak up the atmosphere at Glastonbury
music
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
  • Get to the point
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.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own