How to choose a student bank account

With A-level results in and university places settled there is plenty of preparation to cram in before starting life as a student. Aside from buying bedding and books and learning how to cook a couple of basic meals, it is time to pick a student bank account.

For many teenagers this is the first time they will have had access to a current account with an overdraft. Which one you choose can make a big difference to day-to-day uni life by making sure you have access to cash when you need it. It can also have an affect on your life after university, as the right one can help reduce the amount of debt you're left with after graduation.

Every bank wants to attract students, as once someone picks an account the chances are he or she will stay with that bank for decades to come, taking out various products from loans to mortgages. Every student a bank signs up therefore represents years of profitable custom.

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As a result there are plenty of freebies on offer to lure you in. This year you could grab everything from a free railcard to Amazon gift vouchers, but don't let these lure you into picking the wrong account.

For example, Lloyds is offering students a free NUS card, which gives the holder discounts at over 170 shops. That sounds great, but the card only costs £12 a year normally and the rest of the Lloyds account offering doesn't stand out from the crowd.

The most important thing to consider when choosing a student bank account is the overdraft. A recent survey by financial education company Blackbullion found that half of students run out of cash between student loan payments.

Some banks will offer you a credit card to help with this shortfall, but you are better off with an interest-free overdraft – you'll pay interest on any credit card debt you don't repay in full each month.

HSBC and Halifax top the tables for overdrafts, with an interest-free allowance of up to £3,000 over the length of a course. HSBC pips Halifax, though, as it also offers successful applicants a £60 Amazon gift certificate off £70 off a Kindle Fire HDX. Halifax only tries to woo you with the option to personalise your debit card with your favourite photo, which is probably the worst account incentive I've ever come across.

If you are hoping to stay in the black while at university then Santander's student bank account is a good choice. It pays a tiered rate of interest of 1 per cent if you have at least £100 in your account, 2 per cent for £200 and 3 per cent for balances over £300, capped at £2,000. Plus there is a £1,500 interest-free overdraft facility if your good intentions go bad.

Santander will also give you a four-year 16-25 Railcard worth around £100, which will save you a third on rail travel. That's a useful perk, but if you need a bigger overdraft you'd be better off choosing the HSBC account.

Finally, once you've chosen a student account don't forget about insurance. Students are expected to head off to university with around £2,000 of gadgets this year, so insurance is essential. Setting up your own specialist policy with an insurer such as Endsleigh could cost you around £150 a year. A much cheaper option is to speak to your parent's contents insurer as many will cover your belongings when they are in your halls of residence.