Welcome to the final post in our three part series on graduate finances. In the first post, we met medical graduate Harri Roe. We looked at her student debt – how much she owes, the interest she can expect to pay on that debt and what it all means for her credit rating.
In this post, we’ll be taking a look at Harri’s current account, her overdraft and why loyalty doesn’t pay.
Who do you bank with at the moment?
Like most recent graduates, Harri still has the same current account that she had as a student. Harri’s bank will now ‘upgrade’ this account into a graduate current account.
This is standard practice – if you’ve recently graduated, your bank will bump up your student account up into a graduate equivalent.
So what this means in practice? Expect your interest-free overdraft to start disappearing.
Why should you switch?
You may have chosen your student account for very good reasons. Some student accounts offer enticing freebies. Others have huge tempting overdraft limits.
Unfortunately a current account that worked for you as a student may work against you as a graduate.
Fast-shrinking interest-free overdrafts, poor interest rates and hefty bank charges are just three reasons why you should take a good look at your current account – and consider switching.
You’re in your overdraft. What will this mean now you’ve graduated?
Like a lot of students, Harri is £1,300 into her overdraft. To make sure she doesn’t get stung by large bank fees, she should take a good look at the fine print on her current account.
When banks upgrade your student account to a graduate account, they will put an expiry date on your interest-free overdraft. Your interest-free limit will diminish over time – soon being too far into the red could cost you a fortune in bank charges.
If you’re into your overdraft, the ideal graduate account is one with the largest 0% overdraft for the longest period of time.
The interest-free periods on graduate accounts vary between one to three years. If you’re well into your overdraft, take a good look at the deadlines your bank has set on your current account. Shop around now for a better deal.
Tip: Save the Student is a great port of call for finding top graduate accounts.
You’re not in your overdraft. What should you do?
If you managed to sail through university without touching your overdraft – lucky you!
If you’re in credit – you needn’t restrict your search to graduate accounts. Shop around for the best standard bank accounts.
Take a look at current accounts with the highest interest rates to get the biggest bang for your hard-earned buck. Other benefits to look out for include cash bonuses and cashback on your household bills.
Have you recently graduated? Do you have any money tips for new grads? Share your experiences in the comments!