Choosing the best student account

moneysupermarket.com urges all students to pay close attention when choosing their bank account as providers will offer a range of tempting incentives to lure them in. Students should not get fooled by the offers and detract from what matters: interest rates and interest-free overdrafts.

Clare Francis, site editor at moneysupermarket.com, said: "For all students who are about to head to university, now is the time to look at the best bank accounts available. Whilst freshers' week or even fortnight is more exciting than choosing a bank account, it is important to get your finances in order from the off so you have greater freedom to enjoy all of university life without worrying about it when it's too late.

"When considering what bank account to opt for, students should look at interest rates on offer, the level of interest-free overdraft available, unauthorised overdraft rates and lastly the freebies, as although useful, the value of these will be low compared to interest-free overdrafts.

"For many students debt becomes an unfortunate fact of life and while this doesn't mean they should throw caution to the wind and spend freely, the good news is that banks recognise this and as such offer favourable borrowing terms. Interest-free overdrafts are a key feature of student accounts and they undoubtedly ease the burden of trying to fund a university degree.

"In-credit interest rates are also an important consideration for some students. For those lucky enough not to be living their life in the red, the in-credit rate is more important than the overdraft facility. Most student accounts pay just 0.1 per cent on balances in credit, although HSBC and Santander offer two per cent on amounts up to £1000 and £500 respectively."