Banks go hi-tech to lure students

Student finances look set to be even tighter than usual this year

High Street banks hoping to bring soon-to-be students into the fold have gone hi-tech.

Free web-cams, iPods and portable media players are all on offer as well as the more run-of-the-mill student railcards and interest-free overdrafts.

Grabbing customers early is a key strategy, as students often stay with the same bank for 40 years or more.

Lloyds TSB, HSBC and NatWest are among those battling it out for the undergraduate pound with the goodies.

As well as having their eye on future custom, banks also make money from fees and penalties imposed on students who go above their borrowing threshold - although the limits are up for negotiation.

And with top-up fees being introduced this year, undergraduate finances are likely to be harder pressed than ever before.

'Shop around'

Stuart Glendinning, of Moneysupermarket.com, warns prospective students not to fall simply for the gadgets and gizmos on offer.

BANK OFFERS Lloyds TSB - iPod shuffle, free one-year membership of Youth Hostel Association, cut-price cinema tickets HSBC - MP4 player or free CDs NatWest - free webcam, five-year Young Persons Railcard Barclays - discounts on items including CDs and books

"It does pay to shop around," he told the BBC. "The most important item is the interest-free overdraft - they all offer interest-free overdrafts that typically go up to £2,000."

But students should keep an eye on the limits for each year, he adds, pointing out that while Barclays offers a limit of £1,000 the Halifax offers £1,720 for the first year.

Experts also add that signing customers up early is a good move, not only because they may stay with the same bank for the rest of their life, but also because many young people remain in debt after their years at university.

Latest research from Uswitch.com shows one in five young people aged 18-29 admit to being permanently overdrawn.

"While an interest-free overdraft can be a cheap and convenient way to make ends meet they should appreciate that this is not free cash, and that credit always comes at a price," said Nick White, Uswitch head of personal finance

"Although many students will have no option but to borrow on an overdraft, they should try to avoid falling into the 'credit habit', which could see them relying on overdrafts and credit cards as a way of life."