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Graduate Accounts 2013/14 Cut the cost of post-uni banking

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If you  get a better graduate account deal I'll eat my hat!

Don't simply stick with your student bank account after uni. Banks love graduates (and the dosh they bring) so offer special deals unavailable to others, such as 0% overdrafts for up to three years.

If you've graduated in the past three years, check, ditch & switch to save £100s.

The five BIG facts

1.If overdrawn, get the biggest 0% deal possible

If you're already overdrawn on your existing student account, look for the biggest and longest-lasting interest-free overdraft. But this isn't about borrowing more.

The aim is that by not paying interest, more of your money can go towards clearing your actual debts. To find the right deal, see 0% graduate overdrafts.

2.Graduate accounts aren't just for new graduates

Stick with your current student account and you may find your 0% overdraft quickly diminishing in the first year after university. Some graduate accounts offer preferential terms for up to three years.

Therefore, even if you graduated in 2011 or 2012, you may still be able to gain by switching to a graduate account now.

3.Use your graduate 0% to wean yourself OFF overdrafts

You'll have to pay it off at some point, usually after two or three years. Fail to do so and you'll be subject to charges and fees. The aim should be to gradually reduce the overdraft so that by the time you're being charged for it, you no longer have one.

For a £2,000 overdraft which reduces gradually over 3 years, repayments need to be at least £55 a month. In other words, at the end of each month, your total overdraft should be £55 less than the previous month. To help, use the Free Budget Planner and Money Makeover guides.

4.Likely to be in credit? Max out your interest

If you're one of the lucky ones who will be in credit for much of your first few years of banking, forget overdrafts - focus on accounts paying the most interest.

These tend to be standard bank accounts rather than special graduate deals. Therefore to get them you'll usually need a regular income of more than a set minimum. See the Top In-Credit accounts for the best.

Alternatively, if you're super-savvy financially, you could make even more money by utilising 0% overdrafts and Current Account Stoozing.

5.Never go over your overdraft limit - BUDGET!

Budgeting isn't a rule just for graduates, it's a rule for life. The game changes if you go beyond your overdraft limit - charges shoot up and you can be caught in a vicious cycle that's tough to ever escape.

If you're struggling, at least talk to the bank. Try to agree an extension but remember, you are likely to be charged interest between 9.9% AER and a huge 19.9% AER. It's always far better to plan and budget to avoid this.

If not, or you go over without permission, the charges can be enormous - up to £25 per transaction (so a shopping trip in five shops spending £30 on your debit card could mean £125 of charges!). More info in Bank Charges Compared.

Top graduate 0% overdrafts 2013/14

To be a winner here, banks must offer the biggest 0% overdrafts for the longest period. This year, all limits are "up-to" amounts, meaning you're not guaranteed to get them. However, providing you've got no glaring issues on your credit file, the chances of getting the full amounts are high.

All of the following accounts require you to pass a credit score (see Credit Rating guide).

Lloyds Bank

Lloyds BankUp to £2,000 overdraft in year one

  • Overdraft up to £2,000
  • Apply

The biggest potential overdraft over all three years is with Lloyds. You'll get up to £2,000 in the first year after graduation, £1,500 in the second and £1,000 in the third year.

There's a £10 buffer if you go over your limits but borrow more and any agreed lending is at 16.77% EAR plus a £6 monthly fee. Go over this and fees are up to £10 a day so avoid at all costs.

  • In-credit interest: 0% AER
  • Arranged overdraft cost: 16.77% EAR plus £6/mth.
  • Unarranged overdraft fees: £6/mth plus £5/day on £10-£25, £10/day on £25+
  • 0% overdraft: Yr 1 £2,000, Yr 2 £1,500 Yr 3 £1,000
Santander

SantanderGood limits, costly if you borrow more.

  • Overdraft up to £2,000
  • Apply

Santander has good interest-free overdraft limits - £2,000 in the first year after graduation, £1,000 in the second year and £500 in the third. It's not as good as Lloyds, but if a branch is closer you may prefer it.

Any agreed borrowing over the 0% limit, won't hit you with any arrangement fees. But avoid going into an unauthorised overdraft - the fees are huge.

  • In-credit interest: 0% AER
  • Arranged overdraft cost: No fees
  • Unarranged overdraft fees: £5/day (max 10/mth) & £5/£10 paid/unpaid fees per item
  • 0% overdraft: Yr 1 £2,000, Yr 2 £1,000, Yr 3 £500

Seven high street banks offer graduate accounts. Compare each one to find the right account for you. Each bank has varying overdraft limits and terms and conditions.

Compare graduate accountsCheck up to three at a time to compare below

2013/14 Graduate Account Details
Eligibility criteria (must be over 18 to get an overdraft)
Graduated within last 2 years
Must have held its student account at time of graduation
Either need to be working or have confirmed job offer. Must use as main account, paying in salary each month
You must have had its student account at the time of graduation to qualify for this
Graduated within the last 2 years and be able to provide proof of Graduation e.g. a Graduation Certificate
Confirmation of graduation, graduated up to 3 years ago with a degree from a UK-based university. If account isn't with Lloyds/BOS, must transfer account from other provider and pay at least £500/month
UK resident, have graduated from a full time higher education course lasting 2 yrs or more in the past 3 yrs
UK resident, graduated from a full time higher education course lasting 3 yrs or more or completed training as a nurse in the past 3 yrs
Must have held its student account at graduation
Minimum interest free overdraft limits
Year 1
£1,500
£2,000
£2,000
Up to £3,000
Up to £1,500
Up to £2,000
£2000
£2000
£2,000
Year 2
£1,000
N/A
£1,000
N/A
Up to £1,000
Up to £1,500
£1000
£1000
N/A
Year 3
N/A
N/A
£500
N/A
N/A
Up to £1000
£0
N/A
N/A
Are overdrafts guaranteed or on a case by case basis?
No. All overdraft requests are subject to status and assessed on an individual basis.
At the bank's discretion
No. All overdraft requests are subject to status and assessed on an individual basis.
No, case by case basis, dependant on personal circumstances. Not guranteed to get the full £3000.
No. All overdraft requests are subject to status and assessed on an individual basis.
No, case by case. Not guranteed to get the maximum limits.
Not guaranteed.
Not guaranteed.
Guaranteed
Agreed overdrafts beyond the 0% limit
19.3%
9.9%
N/A
7.2%
19.9%
First overdraft request in any 6 month period: free
Subsequent requests: £25

16.77% EAR plus £6/month usage fee

17.81%
9.9%
9.9%
Unauthorised overdraft rate & fees (always avoid - talk to bank first)
If you go past your overdraft, you'll be charged a 'Personal Reserve' fee of £22 every 5 working days, until crediting the account to clear it. You'll be told your personal reserve limit once you're accepted.

Customers will pay £8 per item for a returned or guaranteed transaction, capped at five per day.
18.9%, unpaid items £15 up to max of £150 per quarter.
£5 per day, max 10 days per month, plus paid/unpaid item fees of £5/£10.
24.2% EAR

£28 fee per month.
Returned item fee: £10 (max 1/day)
19.9% EAR

First overdraft request in any 6 month period: free
Subsequent requests: £25

A Return Fee will be payable for considering and returning payment requests, eg, cheque, standing order,
direct debit etc.
up to £10: no charge
up to £25: £10 per item
above £25: £25 per item

16.77% EAR, plus £6/month overdraft usage fee and daily fees up to £10 (max of 8/month).

Daily fee: £6
Returned item fee: £6 Max £90 in charging period (between statements)

Daily fee: £6
Returned item fee: £6 Max £90 in charging period (between statements)
18.9%, unpaid items £15
In-credit interest rate
0%
0%
0%
0.1%
0%
0%
0%
0%
0%
Transfers accepted at graduation?
Yes
No, you must have held its student account to be eligible
Yes
No, you must have held a Halifax student account to be eligible
Yes
Yes
Yes
Yes
No, you must have held its student account
What account does it revert to afterwards?
Barclays Bank Account
Co-operative Current Account
Everyday Current Account
Choice of current accounts
Bank Account
Classic Current Account
Select Account
Select Account
Smile Current Account
Can you get a graduate loan?
Yes; 12.9% typical APR, can apply for loan up until 2 years after graduation
No
Yes; 8.9% typical APR, available up to 3 years after graduation. Must have its graduate account
No
Yes; 5.9% typical APR, available up to five years after graduation.
Yes; rate depends on account history and your credit record. Available up to 5 years from graduation
Yes, 18% rep APR, available up to five years after graduation. Must have its graduate account
Yes; 18% rep APR, available up to five years after graduation. Must have its graduate account
No
Can you open a graduate account with another bank too?
Yes
No
No
No
Yes
No
Yes
Yes
No

Top in-credit graduate accounts 2013/14

If you have a job, earn around £14,000 and are likely to be consistently in credit, go for the account that pays the most interest. These aren't specific graduate accounts, they're the best standard bank accounts - but they often beat graduate deals if you don't have an overdraft. Scan through all the picks though as they've different strengths.

However, their overdrafts are often much smaller, or more expensive. Only do this if being overdrawn is a very unlikely scenario. To get any of the following you are required to pass a credit score (see Credit Rating guide).

If you are likely to be substantially in credit, then its usually best to shift larger amounts of cash into Top Savings Accounts to maximise the interest.

First Direct

Free £100 plus top customer serviceMust earn £13,600 to get it

  • Min monthly income: £1,000
  • Apply

If you earn over £13,600 once you graduate, new First Direct 1st Account customers get a £100 bonus by transferring a salary of at least £1,000 a month within the first three months. It pays no in-credit interest, but scores very highly on customer service (see below).

Due to this, it offers £100 if you switch away within a year, if you've maintained the monthly £1,000 deposits. There's a sting in the tail - if you miss the minimum deposits but keep the account open, you'll be whacked with a £10 monthly fee.

If you were to get this, then ditch and switch between six months and a year after, the double bonus makes it an even bigger winner.

  • In-credit interest: NONE
  • Arranged overdraft Cost: 0% up to £250, 15.9% EAR above that
  • Unarranged overdraft fees: £25 paid item fee or unpaid fee of £0, £10 or £25.
  • Min monthly pay-in: £1,000 ( explanation )
Nationwide

FREE annual European travel insurance*Nationwide:

  • Min monthly income £750
  • Apply*

If you're looking to head off on a few European jaunts and don't need an overdraft, Nationwide's* FlexAccount gives free European travel insurance to those who switch and pay in £750+/mth. If you're going further afield, it's only £20/year to upgrade it to worldwide.

If you have a pre-existing condition, contact Nationwide as you may need a medical before getting cover and a charge could apply. This account is also one of our top pick packaged accounts.

Santander

Up to 3% interest & cashback on bills* Santander: You pay £2/mth fee - work out if it's worth it

  • Min monthly income £500
  • Apply*

If you've bills that you pay by direct debit, and can pay in £500/mth salary, the Santander* 123 Account pays cashback up to 3% and beats the current Top Savings, paying interest on in-credit balances. You'll need to switch to get the deal - see below for full details.

Cashback rates: 1% on water, council tax bills and repayments of up to £1,000/mth on Santander mortgages, 2% on some gas and electricity bills (depends on supplier), 3% on mobile, home phone, broadband and TV packages.

It does have a £2/mth fee though, so only get it if the gains will beat it. For example, paying £100/mth for gas and electricity, and £40/mth for your mobile phone bill, you'll earn around £3. Just check your bills and do a few quick calculations before signing up.

  • In-credit interest: 1% AER for balances over £1k, 2% over £2k, 3% for between £3k-£20k
  • Cashback: 1% on water, council tax & Santander mortgage, 2% on gas & elec, 3% on phone, internet & TV
  • Arranged overdraft cost: £1/day, capped at 20 days/month. 0% for 4mths after switching
  • Unarranged overdraft fees: £5/day

For further options if you don't need an overdraft, see the Best Bank Account guide.

You may make even more stoozing current accounts...

Please don't even read this unless you're an anally-retentive financial superhero, as the consequences of getting it wrong can be a real problem and with low savings rates the current returns just aren't that good anyway.

Yet for the sake of the theory, even if you're likely to be mostly in credit you could choose the biggest and longest-lasting interest-free overdraft and use a technique we call 'current account stoozing' to make money (see the Stoozing guide for full definition of the word).

Once you get the account, take cash out of it and pop it into top-paying instant access savings (see Top Savings and Cash ISA guides) leaving yourself reasonably near, but never over your overdraft limit (and enough room to do normal spending). Always beware any limit changes.

As a result, you're earning interest on money the bank's lent you for free, giving a potential profit of around £50. However, this isn't an excuse for spending or borrowing more. If you're not financially disciplined, please DON'T try it.

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