FIERCE competition among banks to attract first-year university students has again thrown up a dazzling assortment of eye-catching freebies, from cinema tickets to free music downloads and cash deposits.

About 300,000 students received their A-level results last week, and banks are vying to sign up the next generation of professionals with powerful earning potential.

David Black of Defaqto, the financial-data firm, said: “It used to be that the only freebie you got with a current account was a national railcard. Now Royal Bank of Scotland and NatWest offer £50 off mobile broadband from 3 mobile – though you must sign an 18 or 24-month contract at up to £30 a month.”

RBS still offers a free five-year railcard worth £120, as well as discounts from certain retailers, 25% off gigs and 2-for1 Vue cinema tickets. Halifax offers 25% first-year AA membership and commission-free foreign currency and travellers’ cheques.

However, with living costs for students soaring 9.6% in the past year – more than double the national rate of inflation – it is more important than ever to look beyond the freebies and find the best deal to avoid accumulating big debts.

Graduates who start university in September will finish with an average debt of £14,161 while some will owe more than £21,500 by the time they finish studying, according to a survey of 2,000 students by Push.co.uk, the student information site.

Johnny Rich, of Push, said: “Students are being particularly badly hit by the worsening economy. This may be because rising food costs and rent make up a large and inflexible part of students’ outgoings.”

Martin Lewis of Moneysavingexpert, the consumer website, said: “Banks try to bribe students with freebies but these sweeteners should at best be an afterthought. First consideration must be the interest-free overdraft. Students need to find the bank that gives the most 0% borrowing for the longest.”

Halifax Bank of Scotland increased the limit on its interest-free overdrafts this year by £250 to £3,000 each year for four years, meaning it is the best best for inter-est-free-debt. However, it takes a tough line on breaches, charging a rate of 7.2% for agreed overdrafts and 24.2% on unauthorised overdrafts, as well as a £28 monthly fee plus a maximum of £20 a day per transaction that takes you into the red.

Royal Bank of Scotland increased its 0% overdraft limit this year by £250 to £2,750. It does not offer an authorised overdraft limit, meaning you go straight to a 29.84% unauthorised overdraft rate. The unauthorised rate is 17.81% on NatWest accounts.

Abbey, meanwhile, offers £50 cash to students who open a bank account, but is less generous with its interest-free overdraft, offering a limit of £1,000 in the first year, rising to £1,800 in the fourth year.

Barclays, which also offers £1,000 in year one rising to £1,750 in the final year, is looking to entice students with a free cinema ticket every month for six months. It charges 27.5% on unauthorised overdrafts.

Lloyds has the lowest unauthorised overdraft rate of the five biggest banks at 8.2%, however you could get trapped by fees. Lloyds will waive its fee the first time you go over the limit but charges up to £20 per day thereafter.

It offers £1,500 interest free overdraft a year for the first three years and then £2,000 in the fourth year. Incentives to sign up include 35 free eMusic downloads worth £13, as well as commission-free foreign currency and travellers cheques.

Travel tips the balance

FRIENDS Hannah Eder, left, from Hampstead in north London and Charlotte Rose, of Notting Hill, west London, begin studying at Bristol University next month.

The pair, both 19, finished school last year and travelled through South America on their gap year. They will live in student halls for the first year and neither intends to work initially.

Hannah took out Lloyds TSB’s student account before she went travelling, but is now leaning toward NatWest’s student account. She said: ‘It seems to be the most popular and I have heard it’s good for travel.’