Abbey has announced a new student bank account, which will be available from mid-August. The account will give £50 cash to students as an 'opening gift' as well as paying 4% in-credit interest on balances up to £500 throughout their university education.

But, although a credit balance is an unlikely financial situation for most students to be in, the account also offers a stepped interest-free overdraft, which increases annually. It starts at £1,000 in year one, rising to £1,250 in year two, £1,500 in year three, £1,800 in the fourth year. If you study for a fifth year you are entitled to £2,000 interest-free. For students with an agreed overdraft over the interest-free limit, the interest rate is 9.9% and there are no fees.

Steve Shore, Director of Abbey Banking, commented: "Going to university is exciting but can be a difficult time when it comes to finances. Key to successful financial planning at university is making sure your money, when you have it, is working for you and also that your debts are not costing you too much."

Other features of the account include a Visa debit or electron card with chip & pin, a chequebook and access to your money via the internet.

Students can open the account in a branch, over the telephone on 0800 032 8727 or via the Abbey website. Students will need to bring identification and proof of the course they are following with them to open an account.

Check out the best student accounts here

Read the CashQuestions guide to student finance

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