Banks are giving us massive £3000 overdrafts this year

Generous banks are offering out huge three grand interest free overdrafts to brand new freshers. 

This year Halifax and HSBC are leading the way for filling our accounts with more cash, offering a £3000 safety net.

But on the downside, those who splash out beyond their overdraft will be financially stung by Halifax – with 24.2 per cent interest rate charges.

All banks are stepping up their overdraft limits after maintenance loans were been scrapped, which left us with even more money problems.

Barclays offer up £1500 interest-free borrowing in first year and £2000 from second year onwards while Natwest give £2000 overdrafts a year.

Lloyds allow £1500 in years one and two with £2000 afterwards, while TSB hand out £1500 every year.

And just wanting to be different, Co-operative Bank offer £1400 for freshers, £1700 in second year and £2000 in year for finalists.

These days banks are now choosing to flood us with money rather than with us over with material gifts.

But back in 2001, Abbey National – now Santander – tried to bribe students with Sony CD players and £40 cash.

A year later Natwest promised a “student starter kit” featuring a kettle, toaster and radio alarm clock.

Always down with the kids, HSBC even offered an mp3 player if students switched opened up an account in 2005.

By contrast, the best freebies this year are the four year young person’s railcard from Santander and a £60 Amazon voucher from HSBC.

David Black, director of DJB Research, thinks there’s no point looking at freebies, and we should focus on the interest-free overdraft.

He told the Guardian: “Do bear in mind that you may not necessarily be offered the maximum overdraft for the maximum amount cited.”

Andrew Hagger of Moneycomms.co.uk believes the major financial benefit of any student account is the ability to borrow as much as possible interest-free.

He said: “If you borrowed £3,000 via an overdraft you would pay £195 more in year one with Lloyds compared with Halifax, and £700 more over four years.”

It seems impossible, but if you actually have some money left over then banks will actually hand out quite generous interest.

TSB offer a whopping 5 per cent interest, but only if you’ve got less than £500 in your account.

Meanwhile Santander will pay out 1 per cent on balances between £200 and £300, but increase it to 3 per cent for accounts between £300 and £2000.