You’re right-on. You’ve got a “Drop The Debt” T-shirt, two years on a kibbutz under your hemp belt and more cheap-yet-meaningful bracelets than Argos.

And now you’ve got a bank account.

Oh, the shame. But you need one of these instruments of capitalism because you are about to experience debt at close quarters. The maximum maintenance loan is £4,405. A year! Can you live off that?

To facilitate the debt you need a bank account. And that gives you access to an overdraft.

This is the amount of money you owe the bank. And because the banks know you are a student, and therefore cash poor, they can offer you a very decent rate.

The incredible thing is that because the banks see you as a future good earner they are fighting for your custom.

Student Overdrafts

And one of the key battle grounds is overdraft allowances. And this is not just the overdraft while you are in full-time education (when the bank knows it will make little from you) but also the high rate of interest it will change once you graduate. Ask about this when applying for an account.

The general rule is not to be tempted by the inducements, and they are many. You want the cheapest money you can get. You do not really want an MP3 player (LloydsTSB), an MP4 player (HSBC – note the one-upmanship), railcards (NatWest) and a small furry thing with a sticky bottom (pretty much every bank).

You must remember that when things are shiny and new envisaging debt can be hard if not impossible. But unless you are rich it will happen. And you need an understanding bank.

Which Bank?

Consider opening an account with a bank that has a branch close to where you study. This will give you access to a human face when you need to talk. And a bank on campus is likely to have staff trained in you particular kind of crisis.

While at college you will be offered an interest-free overdraft. The amount varies. In year 1 at Barclays, you can get £1,000*. That’s against £1,750 at Halifax. In year two, you can get £1,250 at HSBC and £1,500 at Lloyds TSB.

Problems begin when you exceed your agreed overdraft limit. Go over with Lloyds and fees could be £30 a day.

If you know you are going to use an unauthorised overdraft try to make it authorised by telling you bank beforehand. If you expect to make a deposit to offset this extra burden sometime soon the bank may agree to a period of interest-free grace.

Typically, students will be expected to pay between 7 and 12 per cent for an unauthorised overdraft, although NatWest charges nothing.

No Credit

And resist the temptation to take out a credit card to keep you going. Borrowing on credit cards is a mug’s game. Barlcays charges 19.9 per cent for the privilege of credit card debt. This is fairly typical.

And lastly, when you have completed your course, your bank will want to start earning from you. You must be ruthless. You owe them nothing. Hunt around for the best deal.

* All rates were correct at the time of publication but are liable to change. Anyone applying for a bank account should check rates with the bank direct or via a price comparison website like http://www.thisismoney.co.uk/accountfinder.

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