Lloyds TSB will be handing out free Apple iPods to prospective university students from today as the annual battle to grab a share of the crucial student account market gets under way.HSBC is offering an "MP4" music and video player or 10 free CDs, while the leader in the student market, NatWest, is hoping to lure teenagers with a five-year railcard worth £100. Barclays, a one-time pariah on campuses because of its apartheid-era South Africa banking operations, is the only one of the big four to steer clear of freebies, focusing on an interest-free overdraft deal instead.

The battle to obtain a share of the student market is vital for the banks because of the remarkable inertia among customers. About two-thirds of accounts opened by students stay with the bank for life and are widely seen as the most lucrative segment of retail banking.

Every year students are told not to be lured by the freebies on offer, but with most banks offering similar overdraft deals, the advice is routinely disregarded. Halifax and Abbey steadfastly refuse to play the freebie game - and have won a steadfastly small share of the market.

Lloyds TSB is offering the best interest-free overdraft deal, with students able to run up a £1,500 debt without charges during a three-year degree. NatWest starts with a £1,250 interest-free overdraft in the first year, rising to £1,600 after three years and £1,800 if the course is five years.

The banks are also competing on low-interest loans. Barclays will allow students to extend overdrafts to £3,000 at a rate of 8.9%, while HSBC offers loans at 7.8%.

It's a far cry from the 1980s, when Midland Bank (later to become HSBC) offered just three blank cassette tapes.