Money: Banks out to curry favour

0 Comments | Sunday Mirror, Aug 15, 2004 | by MELANIE WRIGHT on handling your finances

FANCY getting your hands on a free curry, driving lesson, young person's railcard or a whole bunch of other goodies? Just open a student account and take your pick.

As thousands of school leavers prepare to get their A-level results this Thursday, the banks are queuing up to entice those going to university to sign on the dotted line.

The range of incentives is growing all the time.

Lloyds TSB is offering 12 vouchers for two curries or two fish and chip meals for the price of one, a 16 per cent discount off some bikes at www.wheelies.co.uk, and 10 per cent off books at Blackwells online.

Barclays goodies include a National Express coach card worth pounds 19, a 20 per cent discount card for places like Alton Towers and Madame Tussaud's, 10 per cent off at All:Sports and pounds 25 off Dell computers. There's also pounds 20 of Waterstones vouchers for students who pay pounds 500 into their account.

HSBC is giving a free, five-year young person's railcard worth pounds 100 to students who sign up before August 21, and a free driving lesson. Those who miss the deadline will get pounds 50. NatWest has the same railcard offer going until October 31 with a pounds 55 cash alternative.

But beware. Don't just pick a bank because of the incentives.

In the long-term, it's much more important to go for one which gives you a decent interest-free overdraft.

With HSBC and Barclays this is pounds 1,000 in the first year, pounds 1,250 in the second, pounds 1,500 in the third and pounds 1,750 in the fourth.

Those who take a five-year-course - such as medicine or veterinary science - get an interest-free overdraft of pounds 2,000 in their last year. NatWest, Halifax and Royal Bank of Scotland provide interest-free overdrafts of pounds 1,250 in the first year, rising to pounds 2,000 in the fifth.

If your bank agrees, you may be able to borrow more than these limits. Some banks, like First Trust and NatWest, will make no charge for this, but others will add interest of anything up to 10 per cent on authorised overdrafts.

A NatWest spokesman said: "If a student needs extra funds they must come to us and, based on their circumstances, we will decide whether to lend them more. If we do agree, then we won't charge interest on the extra."

If you don't keep within the agreed limits be prepared for a nasty shock. Unauthorised overdraft rates can be sky high.

The Co-Op bank charges 32.92 per cent - nearly seven times higher than the 4.75 per cent Bank of England base rate. Royal Bank of Scotland charges 29.84 per cent, Lloyds TSB 29.8 per cent, Barclays 27.5 per cent and Abbey 27 per cent.

Bank of Ireland, First Trust Bank and HSBC charge the least - 12.68 per cent, 13.75 per cent and 14.8 per cent.

If you think you will be able to stay in the black, go for an account which offers a decent level of interest if you are in credit.

Smile pays three per cent gross, Halifax 2.5 per cent, and Royal Bank of Scotland two per cent. Most others pay no interest - or a miserable 0.1 per cent.

SARAH Stimpson, 19, is at university 160 miles from her home so her free young person's railcard has been a boon.

Sarah, studying history and politics at Keele, Staffs, says: "To get home to Norfolk I pay around pounds 35 instead of pounds 50 so I saved at least pounds 70 last year.

"I looked at loads of student accounts before deciding, but that was one of the main reasons I went for HSBC in the end."