How to loop over the lines of a file?

With for and IFS:

#!/bin/bash

IFS=$'\n'       # make newlines the only separator
set -f          # disable globbing
for i in $(cat < "$1"); do
  echo "tester: $i"
done

Note however that it will skip empty lines as newline being an IFS-white-space character, sequences of it count as 1 and the leading and trailing ones are ignored. With zsh and ksh93 (not bash), you can change it to IFS=$'\n\n' for newline not to be treated specially, however note that all trailing newline characters (so that includes trailing empty lines) will always be removed by the command substitution.

Or with read (no more cat):

#!/bin/bash

while IFS= read -r line; do
  echo "tester: $line"
done < "$1"

There, empty lines are preserved, but note that it would skip the last line if it was not properly delimited by a newline character.

(9 years later:)
Both provided answers would fail on files without a newline at the end, this will effectively skip the last line, produce no errors, would lead to disaster (learned hard way:).

The best concise solution I found so far that "Just Works" (in both bash and sh):

while IFS='' read -r LINE || [ -n "${LINE}" ]; do
    echo "processing line: ${LINE}"
done < /path/to/input/file.txt

For more in-depth discussion see this StackOverflow discussion: How to use "while read" (Bash) to read the last line in a file if there’s no newline at the end of the file?

Beware: this approach adds an additional newline to the last line if there is none already.