Students applying for a new bank account should be wary of accounts which offer free gifts and discounts, according to an expert. It has been observed that most of the students in the United Kingdom are falling for the freebies that the banks are offering rather than look for the actual which will be useful to them in the long run.

Many banks try and make their accounts more attractive to students by including offers such as a free iPod or a young person's railcard. Students generally fall for such freebies and do not consider important things such as interest free overdraft facilities which are likely to be useful for them as long as they operate the accounts as students.

Michelle Slade, of comparison site moneyfacts.co.uk, advised this year's freshers to consider accounts with interest-free overdrafts. She said: "Interest-free overdrafts are the most important feature of student accounts. Discounts and cinema tickets are tempting, but you may pay for them twice over, with a higher overdraft rate."

Halifax currently offers its customers the largest interest-free overdraft at £3,000 from the first year, while most high street banks operate a tiered system which gradually increases the interest-free overdraft. This comes in handy for students in case their accounts aren’t credit regularly. This also gives them the liberty to withdraw cash whenever necessary.

Ms Slade added that some overdraft limits are subject to previous credit history, with a lower limit offered to those who do not fulfil the bank's lending criteria. It is thus important for students to make regular repayment to the bank in case of overdrafts. This ensures good credit card scores and increases the borrowing power in the future.

Financial analysts have said that students should analyse the long term benefits from their bank accounts rather then fall for short term gains in terms of gifts from the banks.