- Discounts and incentives await freshers as big banks fight for business
New students starting university this September face a labyrinth of deals, discounts and incentives from banks desperate to sign them up, says MoneyExpert.com.
The independent financial comparison website says there is a difference of over £2,000 in the size of interest-free overdrafts offered to students by the big banks this year.
MoneyExpert.com research* shows the average overdraft offered by the major banks to a first year student is £1,218, which rises to £2,140 for final year students. The smallest overdraft offered to students by a major bank is £500 (first year students with Lloyds TSB) while the largest is £2,750 (HBOS student accounts).
And eye-catching discounts and incentives will further muddy the waters as freshers embark on their first major financial decision – where to stick their cash, or perhaps more appropriately, who to borrow money from.
MoneyExpert.com analysis shows incentives for students range from genuinely worthwhile deals to gimmicks worth practically nothing. Some of the best deals on offer range from a free railcard for five years (Natwest) to Youth Hostel Association membership (Lloyds TSB) or a lost key retrieval service (RBS).
However MoneyExpert.com warns that some offers are widely available to students anyway such as discounts on clothes, commission-free foreign currency and money off theatre tickets.
Sean Gardner, Chief Executive of MoneyExpert.com, said: "Arriving at university as a fresher is never easy, and choosing your bank as a student is not as simple as it might sound, either.
"The big banks are desperate to sign up students in the hope that they’ll either remain with them long term or will borrow lots of money, or both. This is why we see so many high-profile campaigns designed to entice students in at this time of year.
"But choosing the right bank is a bit of a minefield. It often depends on your financial circumstances as the offers do vary. Making a comparison is a must."
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Gimmicks aren’t the only thing to worry students looking for a bank. Charges for going over your overdraft limit remain high, at least until the high-profile court case brought by the Office of Fair Trading is resolved – and this could take years. MoneyExpert.com says the average charge for use of an unauthorised overdraft on a student account is £25.14, while the typical cost of a bounced cheque is a staggering £32.75.
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*Research conducted on 08.08.07 amongst 8 of the largest student bank providers