WITH the start of a new college and university term just around the corner, high street banks are busy marketing their latest student accounts to a new generation of customers.
While features such as discounts in bars and clothes shops are attractive, selecting an account with competitive terms on overdraft facilities should be a priority to young people getting their first taste of independence.
Scottish students are now estimated to be graduating with a Student Loans Company debt of more than £20,000, following a 58% jump in overall debt last year, and there is growing concern over the number of students being directed to payday lenders. So it pays to pick a bank account that offers the most attractive cost savings over the course of a college or university career.
Financial advice is at hand at many institutions, including Aberdeen University where the Students' Association's money adviser offers guidance on funding, debt and benefits.
Genna Clarke, the association's president for welfare and equal opportunities, said: "I think there's more awareness now of supporting students with their finances. It also depends on your background, whether money is a problem for you. For a lot of students it is a big issue when they first come to university and they are not used to handling their money."
Comparison website Moneysupermarket.com said that while it is important for students to secure overdrafts which are sufficiently large, they must also be manageable, given the steep charges imposed when students stray into unauthorised borrowing. For example, TSB charges 8.21% but at Halifax it's 24.2%. Santander levies a one-off payment of £5 per day, capped at £25 per month.
The comparison site also warns that 0% deals often expire on graduation, and advises that students in this position work to clear their debts and secure a short-term interest-free graduate overdraft to avoid incurring additional interest payments.
Both HSBC and Halifax offer free overdrafts of up to £3000, which are available for the duration of a college or university course.
The HSBC account comes with added benefits, such as a £60 Amazon gift card if opened before October 31.
It also attracts credit interest at 2% on up to £1000 in the first year of university, though the rate is 0% thereafter. The Halifax credit rate is a next-to-nothing 0.1%.
Santander has factored travel perks into its latest student account. It comes in the wake of research showing students collectively spend £667 million a year travelling to and from university.
The bank's 123 student current account comes with a free 16-25 railcard, valid for four years, which it says can save customers more than £700 in train fares. But students must pay £500 per term into the account - the move is to prevent new accounts being opened just for the railcard.
The account offers an overdraft varying from £1500 to £2000, and a credit interest rate of 3%.
Clarke said discounted or free travel are attractive options, particularly for students who are studying away from their home town.
Bank of Scotland, meanwhile, is highlighting a free National Union of Students extra card for three years as a key benefit of its 2014 student current account.
The card - which normally costs £12 for the one-year option - offers access to discounts, offers and competitions with more than 170 brands and retailers on the high street and online, including Amazon, Apple, Asos, Odeon and Co-operative Food.
Other features of Bank of Scotland's offering include a tiered interest and fee-free planned overdraft of up to £2000, mobile banking app and student credit card. The latter offers 56 days' interest-free credit on purchases when the balance is paid back in full and on time each month, with a minimum £500 limit. It also has extra protection when shopping online.
Credit cards for students have been questioned by some debt advisers, but Phillip Robinson, director of accounts for BoS, said: "We have designed an account to help students make their money go further and make sure they are in a position to feel in control of their finances when it matters most, both now and in future."
TSB, now back in the student market as a stand-alone brand, limits its overdraft in all years to £1500, and pays 5% credit interest but only on balances up to £500.
A mobile app features in Royal Bank of Scotland's package for students, which it pledged will "uniproof" customers over the course of their university years.
The RBS account also comes with tools such as emergency cash, text alerts, contactless card payments (excluding overseas customers) and an interest-free, tiered arranged overdraft of up to £2000.
An added benefit is a tastecard, providing 50% discounts and two-for-one deals for thousands of restaurants around the country.
Dan Jones, head of students for RBS, said: "Our helpful products and services, such as the mobile banking app, take the effort out of budgeting so that students can spend their time on the things that really matter."