Choose your banking partner with care

PERSONAL FINANCE

MOST NEW students meet a life-long partner in the first week of college. Surprised? The fact is that many people pick a bank when they first go to college and then stick with it. So new students (and their parents) should take time over this choice to make sure it is going to be suitable for a long-term relationship.

The National Union of Students (NUS) believes that pounds 1,000 overdraft offers will be crucial this year. With many students now facing the added financial burden of tuition fees and with the mandatory maintenance grant being phased out by 1999/2000, finding a bank with a flexible lending policy is the first requirement.

The NUS estimates that even if your income comprised the maximum grant and maximum student loan, this would still leave you with a shortfall of pounds 1,705 inside London and pounds 1,246 outside London over an average academic year. Student debt looks to rise sharply from the 1997/8 average figure of pounds 2,960, so your priority should be to pick a bank with a generous overdraft arrangement.

The NUS recommends that you visit the banks on your campus as the staff there will be used to dealing with student problems. Alternatively, you could stick with a bank nearer home: you may have a special deal at your parents' bank, for example.

Don't feel that you have to bank with the on-campus branches. The Co- Op and the Royal Bank of Scotland do not have as many branches as the big names, although both offer good deals and telephone banking. The RBS is unique in allowing you to withdraw money, without a charge, from just about every cash machine in the country.

Generally, banks aim to offer reasonable deals for students. As a potential high earner, you should expect a high standard of service. Which? magazine considers First Direct, Alliance & Leicester and The Co-Operative Bank as the best overall service providers, with Barclays and NatWest coming out below average. First Direct does not go out of its way to chase student custom. Although Lloyds and TSB are jointly owned, students are encouraged to take out a Lloyds account over a TSB one.

Choosing an account is a question of looking beyond the freebies and weighing up what is necessary for you. After the requisite interest-free overdraft, you should consider safety measures such as buffer zones, so that if you do go overdrawn you will not have to pay high bank charges.

Investigate what additional services and discounts are on offer, but also find out how long they are valid. For example, Barclays offer free internet banking, but only for the first year, charging pounds 10 annually after that.

Something else you might take into account is the bank's ethical policy and record. Only The Co-Operative Bank has a clearly stated ethical policy determined by its customers.

Above all, take time to look at all the smallprint in the deals; you can change your mind, but you might as well join a bank that suits you right from the start.

THE VERDICT

The best all-round deal is the Student Account at The Royal Bank of Scotland. This account offers a pounds 1,000 interest-free overdraft in the first year, rising by pounds 300 in each succeeding year. Its greatest advantage is that you have access to all the cash machine networks in Great Britain at no charge.

If you do manage to stay in credit, there is a high credit interest rate of 4 per cent. The package also offers a large range of discounts and student offers, helping out on the cost of insurance, telephone calls, travel and buying CDs, videos and tapes.

in the money

FEW students are as well-prepared financially as Jane Price, 19 (right), from Essex. Her parents set up a savings account for her when she was christened and over the years relatives have given her money that has been paid into the fund. Now she has enough money to pay her basic costs at university.

She is due to start a BA in Women's Studies and Film Studies at Middlesex University. She has savings in two building societies and hopes to live off the interest on her savings and from day-to-day cash in a Woolwich instant access account. She doesn't want to open a conventional current account because she doesn't want an overdraft. "I will have to get a job as well," she says, "but I have already set aside pounds 3,000 from my savings to pay for my tuition fees."

Jane is wary of getting into debt, so she has decided against taking out a student loan

what is on offer from the banks?

Interest rate Interest-free overdraft facility Additional free features Freebies

Alliance & Leicester Current Account 0.75% for pounds 1-pounds 2,000, 1.00% for pounds 2,000+initial deposit No free overdraft Telephone and postal banking, buffer zone pounds 20

Bank of Scotland Student Current Account 5.0% Up to pounds 800 year 1, up to pounds 900, then pounds 1,000 thereafter 10% discount on travel insurance, commission- free travellers cheques

Classic Visa Card, No transaction charges.

Barclays Student Current Account 0.3% Up to pounds 1,800 (with pounds 100 overdraft buffer) Free banking, help from Barclays student business officers, Choice of a free Cellnet "easylife" mobile phone or pounds 30,

Instant Savings Account Student Barclaybank card, commission-free travel money

Halifax Student Current Account 1.00% for pounds 2,000+, 0.50% for pounds 50-pounds 2,000 pounds 1,000 for up to 6 years Fee-free Halifax Visa Card, 24 hr telephone banking JanSport Amarillo backpack, commission-free travel money

Lloyds Bank Student Account 1.0% (minimum pounds 100 deposit) Up to pounds 1,000 years 1-3, up to pounds 2,000 years 4-5 Payment Card & MasterCard free for 4 years, no transaction charges, pounds 35 cash for all new student account holders. An extra pounds 5 for

Commission-free travellers cheques & foreign currency existing account holders with Lloyds, TSB or C&G

Midland 2.25% Up to pounds 750 yr 1, Up to pounds 1,000 yr2, up to1,500 yr 4 Automatic Graduate Scheme for 3 years 4-year student railcard or pounds 50 cash sum

Nationwide FlexAccount and Student Account 1.7% up to-pounds 1,999, 2.6% up to pounds 9,999, 3.3% up to pounds 24,999 No free overdraft No charges for standard services

NatWest Student Current Account 2.0% Up to pounds 1,000 yrs1-3, up to pounds 1,400 yr 4, up to pounds 2,000 beyond Student visa or mastercard, travel insurance, trainee loan scheme Cash gift of pounds 35 or a BT EasyReach Pager. pounds 15 bonus

The Co-Operative Bank Student Current Account No credit interest paid. Savings products available Up to pounds 1,000 yr 1, Up to pounds 1,400 yr 2, Up to pounds 1,800 yr 3 Payment card, 24 hr banking, terms extended to 1 year after graduation

Royal Bank of Scotland Student Current Account 4.0% Up to pounds 1,000 yr 1, up to pounds 1,300 yr 2, up to pounds 1,800 yr4 Telephone call discounts, travel discounts, commission-free currency,

10% discount on top selling CDs , videos & tapes

TSB Current Account 3.0% Up to pounds 500 yr 1, up to pounds 600 yr 2, up to pounds 700 yr 3 Commission-free currency, same terms for 12 months after graduation

Woolwich Card Savers Account 6.75% No free overdraft At Woolwich cash machines you can deposit money