The monetary sting for students leaving university – and how to avoid it by moving to the greatest graduate account

As graduates start function, banks can withdraw their student-only recent account offers. But less properly identified graduate accounts offer curiosity-free of charge overdraft discounts and other incentives We price the greatest current account bargains for latest graduates

  Photograph: ALAMY

The class of 2014 could have left library late nighters and price range housing behind but they needn’t wave goodbye to the perks of pupil banking just yet.

Even graduates from three many years ago can borrow 1000’s of pounds interest free of charge – if they sign up to a graduate account.

But fail to switch to a graduate account, and university leavers could be hit with unexpected charges. Banking institutions seize on their pupil buyers – who have been generally reeled in by a generous curiosity-totally free overdraft deal – only to switch their account to an ordinary recent account after they graduate.

For instance, Santander offers up to £2,000 curiosity cost-free to college students – but warns that its 0pc deal can be instantly withdrawn as soon as a pupil account holder finishes their course.

But switch now, and university leavers can bridge the funds gap amongst research and operate by opening a graduate account that nevertheless offers fee-totally free overdrafts and other advantages.

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• See the table below to examine graduate accounts (and the hidden fees)

• Even now learning? Study our guidebook to the ideal student bank accounts

Will I get to preserve my overdraft?

Usually banks supply charge-totally free overdrafts of £1,000 to £3,000 in the initial year following graduation, falling to all around £1,000 in the third year following university.

But not all university leavers will be eligible for the generous limits advertised by banks. If you have an existing overdraft, other debts, or are even now searching for employment, you are unlikely to be provided the maximum restrict on supply.

If you dipped into your overdraft for the duration of your research, examine up on the terms of the loan and when it has to be repaid – banking institutions can demand that you repay your overdraft at any level, so do not sit on it all summer season.

Pupil account holders at Halifax get a 1-year window following graduation ahead of being switched to a simple present account. Any college students who banked with the Co-operative in the course of their research also have twelve months before its £1,500 overdraft facility is transferred to a standard account that expenses £20 for overdrafts with 18.9pc curiosity.

As with student accounts, banks heavily charge buyers who exceed the agreed limits to their overdraft. If you open a Barclays graduate account, you could be entitled to the maximum £2,000 overdraft. But exceed this limit by £200, and you will be charged by £1 a day.

Financial institution fees: worst offenders

Lloyds TSB costs between the highest charges for an unplanned overdraft at £6 a day with a monthly rate of sixteen.77pc.

If you have a student account, make positive your financial institution has put you on a graduate account just before assuming your overdraft stays curiosity-free of charge. Santander has a graduate account, but explained it can immediately withdraw the 0pc overdraft allowance once student account holders finish their course.

Santander also mentioned that students could have their fee-free of charge overdraft allowance reduced if they are not pleased with how the account was managed for the duration of their studies.

Watch out for any added needs that banks ask for. The Barclays graduate account is only offered to new consumers if they are in long term employment or have a job offer you for a minimum six-month contract.

Any other perks?

If you’re most likely to be in credit, you will be better off with a larger-curiosity account than an overdraft facility. If you are with Santander , you can earn up to 3pc interest on balances in between £300 to £2,000. If you are most likely to be in credit above this amount, it could be really worth upgrading to the ordinary 123 current account that pays interest on balances up to £20,000. The catch is, you need to spend a £2 monthly charge and set up two direct debits – situations which are waived for the graduate account.

Perks are not constrained to pupil and graduate accounts. For a switching bonus, select Halifax and get £100 as lengthy as you spend in at least £750 and set up two monthly direct debits. You won’t pay any costs if your balance reaches £10 beneath zero, but if you use an unplanned overdraft you will be charged £5 a day.

If you are seeking to save a portion of your salary each month, place your pay out into a savings account. See our top picks for regular financial savings accounts .

If you are travelling abroad soon after your scientific studies, an HSBC current account could suit as cardholders have cost-free currency exchange in 67 countries. Lloyds TSB also boasts 0pc commission on foreign currency – but this only applies when you use your debit card to purchase foreign currency from a Lloyds branch, not when you use your debit card abroad.

Metro Bank recently scaled back its throughout the world totally free transaction supply but also gives free debit card use in Europe, charging 15pc interest on any overdraft.

If you need to have to go past your overdraft restrict, consider out a loan or credit card alternatively. Personal loan costs have fallen under 4pc in recent weeks and could be suited individuals searching to borrow in between £7,000 and £10,000. If you are hunting to borrow much less, taking out a credit score card could also lower down curiosity repayments.

Graduate accounts: Compare the bargains and pitfalls

Bank

Charge-cost-free overdraft

Other benefits

Restrictions

View out for…

Barclays

Up to £3,000 in first 12 months

Mobile cellphone insurance coverage, RAC breakdown cover

Graduated in previous three many years. Current consumers need to use Barclays as major account. Non-Barclays buyers have to have company task provide

£7 month to month account charge. Up to £1 every day charge for exceeding overdraft.

HSBC

Up to £1,500 in 1st 12 months, £1,000 in second 12 months

Commission-totally free foreign currency in 67 countries between £100 and £2,000

Graduated in past two many years

19.9pc interest if overdraft is exceeded

Santander

Up to £2,000

3pc interest on balances £300 to £2,000

Graduated in past three many years

£5 a day charged on unarranged overdrafts (capped at £50 a month)

Lloyds TSB

Up to £2,000 in 1st yr, £1,500 in second year and £1,000 in third 12 months

Credit score card restrict of £500 and 0pc commission on foreign currency

Graduated from a British university in past 3 years

Overdraft charge of £6 a month (if you exceed the planned overdraft) at 16.77pc

Royal Bank of Scotland/NatWest

Up to £2,000 in very first 12 months

Free of charge Tastecard membership

Graduated in last three many years

Overdraft charge of £6 a month (if you exceed the organized overdraft with a £6 ‘buffer), curiosity charged at 17.81pc

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