How to find your teenager a student account

piggy bank on calculator

The average student faces debt of £21,198 at the end of their three years of study. Some of this is unavoidable, thanks to tuition fees and living costs, but finding the right current account for your son or daughter is one way of minimising the damage. Here are five points to consider:

1. Most student accounts offer 0% overdrafts, but compare accounts to see which offer lower unauthorised fees and have the best overdraft limits.

Weigh up which will be more useful – for example, Halifax students get a £3,000 overdraft limit, available from the first year of study, whereas the Lloyds TSB student account offers a £1,500 rate for the first year, but its unauthorised interest rate is 8.2% EAR, compared with 24.2% from Halifax. Overdraft limits often increase year on year, so take this into consideration.

Also check when the interest free overdraft runs out. It won't be very handy for your son or daughter if they are expected to pay back thousands within weeks of graduating, or face hefty overdraft charges.

2. Those lucky students who expect to stay in credit should look at the in-credit interest rate. Santander's university student account, for example, offers 2% AER on balances up to £500.

Some student accounts, like the Bank of Ireland's, include credit cards, but you need to feel comfortable about your offspring having such easy access to credit.

A credit card can be helpful for building a positive credit rating if it's used in the right way (paid off in full each month) but your child will have plenty of time to build this up in their post-studying years and is more likely to rack up debts they can't afford.

3. Don't pick an account based on the sweeteners offered with it: HSBC's account, for instance, includes two years' free annual worldwide travel insurance.

This may seem a great offer for students who intend to travel a lot, but check how good the insurance policy is before choosing such an account.

Others offer cash incentives or freebies like ipods or railcards – nice extras but not as important as the overdraft rate.

4. It may make sense to move from your child's existing bank branch to one nearer their university. Check at open days or on the university's website for branches situated locally or even on campus.

Student branches also tend to have specialist bank workers who can talk through issues with students and help them plan if they are having a particularly tight month or two.

5. Looking further ahead, some student accounts will automatically convert to graduate accounts. It's worth seeing what your child can expect to get in terms of overdraft limits, and if the 0% overdraft rate continues.