Santander revives student bank account cash bonus

The offer applies to existing students who switch from another account, and to those already confirmed on a course this autumn. The bonus will be paid on 18 July.

Those who start later this year awaiting A-level results in August aren't eligible. This is because, to open an account, students need a UCAS AS12 letter or university letter confirming a course place, usually given after A-level results.

With the account, you get a £1,000 interest-free overdraft in year one, rising to £1,500 by year three. You are also paid 1% interest on balances up to £500.

You only get the full overdraft limits if you credit your account with at least £500 per term.

You can apply online if you're in your first year or if you're starting university this autumn, provided you're not an existing Santander current account customer. All others must apply in branch.

To get the bonus you must use Santander's 'Account Transfer Service' and have your main income – from student loans, parents or part-time employment – paid into it.

Rare offer

Details of this year's student accounts from all the major banks have yet to be released but freebies, especially cash, are increasingly rare.

For the 2011/12 academic year which is coming to an end, NatWest and Royal Bank of Scotland (RBS) offered a three-year railcard, but only to existing current account holders or RBS customers in Scotland.

In years gone by, banks would fall over themselves to target students with sign-up bonuses but these deals have dried up recently.

What's the best account?

Students who need to borrow should pick the account with the longest 0% overdraft limit. Other forms of debt can be so expensive, they wipe out the benefit of a sign-up bonus.

For the 2011/12 academic year, Co-op offered a guaranteed £1,400 in year one rising to £2,000 by year three, and RBS a guaranteed £1,000 in year one, rising to £1,500 in year three.

This puts Santander up there with the best, though there is no guarantee what next year's limits will be, which makes any decision a gamble of some sorts.

With Santander, beware that in all our bank account customer service polls, it has come bottom.

The offer has been extended until 31 August, so it's now available for all students due to start university this autumn and those looking to switch now. However it may be worth waiting until all offers are released.