Don't stick with your student bank after uni - loyalty can cost! Banks love fresh grads and offer exclusive deals, such as 0% overdrafts for up to three years. You'll get uni perks all over again, but this time, it could be better.
If you've graduated in the past three years, see if you can ditch and switch your account to save £100s in fees, and get free perks on top.
Best buy graduate accounts
Overdrawn? Get the biggest 0% deal possible
If you're already overdrawn from your existing student account, look for the biggest and longest-lasting interest-free overdraft. But these accounts aren'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.
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 after graduation.
Therefore, even if you graduated in 2014 or 2015, you may still be able to gain by switching to a graduate account now.
Use 0% interest to wean yourself OFF overdrafts
You'll have to pay off the overdraft at some point, usually after two or three years. Fail to do so and you'll be subject to astronomical charges and fees. The aim of the game is 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 three 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.
Never go over your overdraft limit - BUDGET!
Budgeting isn't a rule just for students, 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, talk to the bank at least. Try to agree an extension but remember, you are likely to be charged interest between 9.9% EAR and 19.9% EAR, which is huge. 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 £15 per transaction (so a shopping trip in five shops spending £30 on your debit card could mean £75 of charges!). More info in Bank Charges Compared.
Likely to be in credit? Max out your interest
If you're one of the lucky ones who'll be in credit for your first few years of 'grown-up' banking, forget overdrafts - focus on accounts which pay top rates and more, including cashback, travel insurance, or a cash sum upon switching.
These tend to give useful perks, rather than standard graduate deals of an extended 0% overdraft. 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.
Best buys Top graduate 0% overdrafts 2016/17
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 decent.
All of the following accounts require you to pass a credit score (see Credit Rating guide).
Up to £2,000 overdraft limit for three years
One of the largest 0% overdrafts for graduates comes with Santander's 123 Graduate Account. Unlike many other graduate accounts, you get the same max overdraft limit for the whole three years you can have the account, rather than it dropping each year. However, this does mean you need to be self-disciplined to ensure it's paid off by the time the 0% ends.
- You're not guaranteed to get the full £2,000 - it's dependent on your credit record.
- If you keep busting your limit, or manage your account badly, Santander can reduce your interest-free allowance.
- Unarranged overdraft fees are huge at £5+ per day so avoid busting your limit.
- For those who've paid off their student debt, this account also offers the the chance to get interest on your savings for sums over £100. Any amount over £300 and you'll get 3% interest up to £2,000. We've checked with Santander, and unlike the main Santander 123 account for adults where the rate's being cut to 1.5% from November, there's no plan to cut the rate on this account.
- Santander shares its £75,000 UK savings safety guarantee with Cahoot, so any credit balances are protected up to this level.
- As a 123 account holder you're also eligible for savings accounts and loans at preferential rates.
- 0% overdraft: 1st year after graduation, £2,000; 2nd year, £2,000; 3rd year, £2,000
- Arranged overdraft cost: No fees
- Unarranged overdraft fees: £5/day (max 10/mth), £5/£10 paid/unpaid fees per item
- In-credit interest:1% for £100+, 2% for £200+, and 3% from £300 to £2,000
Up to £2,000 overdraft in first year, tiered for three years
Another decent option is Lloyds Bank's Graduate Account. This account is typical of graduate accounts in that the 0% limit tiers down the further you are away from graduation. If you don't have good financial discipline, this could work for you, as you'll have clear goals to try to reach each year to avoid charges. But to be safe, aim to pay off the entire debt before the end of the three years.
- You're not guaranteed to get the maximum £2k overdraft - it depends on your credit record.
- Unarranged overdraft fees are huge at up to £10 per day - so don't bust your limit.
- There's no in-credit interest, so you won't be rewarded if/when you get out of your overdraft.
- Lloyds Bank shares its £75,000 UK savings safety guarantee with Cheltenham & Gloucester, so any credit balances are protected up to this level.
- You'll also be eligible for a graduate loan, up to five years after graduation.
- 0% overdraft: 1st year after graduation, £2,000; 2nd year, £1,500; 3rd year, £1,000
- Arranged overdraft cost (above limit): £10 buffer, then 16.77% EAR plus £6/mth
- Unarranged overdraft fees: 16.77% EAR interest, plus £6/mth usage fee, then £5/day for £10-£25, £10/day for £25+
- In-credit interest: None
Compare all graduate accounts
Are you likely to be using your 0% overdraft to pay off uni debts, or taking advantage of 3% in-credit interest rates? Graduate accounts are offered by 10 high street banks - compare each one to find the right account for you.
Compare graduate accounts Check up to two at a time to compare below
Barclays - Higher Education Account.
|Co-operative Bank - No formal graduate account, Student Current Account holders continue for the first year after graduation.||Santander - 123 Graduate Current Account.||Halifax - No formal graduate account - the Student Current Account continues for the first year after graduation.||HSBC - Graduate Bank Account.||Lloyds Bank - Graduate Account.||Natwest - Graduate Account.||RBS - Graduate Account.||Smile - No formal graduate account, Smile Student Account holders continue for the first year after graduation.||TSB - Graduate Bank Account.|
|Eligibility criteria (must be over 18 to get an overdraft)|
|Existing student accounts will be upgraded. New customers must provide degree certificate from past two years and must be in permanent full-time employment or have a job offer.||Must be in full-time education, including under/post-graduates and mature students. Allowed to transfer any existing student account as long as you use it as your main account, with an initial deposit of £300.||Must have completed a degree, postgraduate degree or course lasting more than two years and within the last three years. Must be working or have confirmed job offer. Must use as main account, paying in salary each month.||Must be existing holder of student account at time of graduation.||Proof of university graduation within the last two years.||Graduated up to 3 years ago with UK degree. Must transfer account from other provider (if not already a customer).||Eligible for Natwest student account holders or permanent UK residents who have graduated within the last three years, studying on a course lasting more than two years.||Open to existing student account holders, and graduates from a full-time higher education course (lasting more than two years) within the past three years.||Not accepting applications at the moment. Must pay main form of funding (min £300) into account, and must hold a Smile Student Account to be eligible for a year’s free overdraft after graduation.||Graduated up to 3 years ago with UK degree. Must transfer account from other provider (if not already a customer).|
|Sign up/other incentives (selected)|
Tastecard and cashback plus, a points system giving you a point (1p) for every £1 spent in selected retailers. You can put it in the bank, trade it for gift cards or tickets, or donate the amount.
|Tastecard and cashback plus, a points system which gives you 1 point (1p) for every £1 you spend at selected retailers. You can put it in the bank, trade it for tickets or gift cards, or donate the amount.||N/A||N/A|
|Maximum interest free overdraft limits|
|Up to £3,000.||£2,000.||Up to £2,000.||Up to £3,000.||Up to £1,500.||Up to £2,000.||Up to £2,000.||£2,000.||£2,000.||£2,000.|
|Up to £2,000.||N/A.||Up to £2,000.||N/A||Up to £1,000.||Up to £1,500.||Up to £1,000.||£1,000.||N/A.||Up to £1,500.|
|Up to £1,000.||N/A.||Up to £2,000.||N/A.||N/A.||Up to £1,000.||Graduates before January 2013 will receive £500 interest-free overdraft, graduates after January 2013 will not have an overdraft facility.||Graduates before January 2013 will receive £500 interest-free overdraft, graduates after January 2013 will not have an overdraft facility.||N/A.||Up to £1,000|
|Are overdrafts guaranteed or on a case by case basis?|
|No, judged on a case-by-case basis.||No, judged on a case-by-case basis.||No, judged on a case-by-case basis.||No, judged on a case-by-case basis.||No, judged on a case-by-case basis.||No, judged on a case-by-case basis.||No, judged on a case-by-case basis.||No, judged on a case-by-case basis.||No, judged on a case-by-case basis.||No, judged on a case-by-case basis.|
|Agreed overdrafts beyond the 0% limit|
|50p/day between £1,000 and £2,000, £1/day for amounts over £2,000, max £3,000.||9.9% EAR.||N/A.||7.2% EAR.||
First overdraft request in any 6 month period is free.
Subsequent requests cost £25.
16.77% EAR plus £6/month usage fee.
16.77% EAR plus £6/month usage fee.
|Unauthorised overdraft rate & fees (always avoid - talk to bank first)|
|£8 per day as a service fee for unpaid items.||18.9% EAR.||£5 per day, max 10 days per month, plus paid/unpaid item fees of £5/£10.||24.2% EAR.||
First overdraft request in any 6 month period: free
Subsequent requests: £25.
16.77% EAR, plus £6/month overdraft usage fee and daily fees up to £10 (max of 8/month).
£6/day for unarranged overdrafts greater than £6. Max £90 per charge period (the month-long period between each bank statement).
|£6/day for unarranged overdrafts greater than £6. Maximum charge is £90 per charge period (month-long period between each statement).||18.9% EAR.||
16.77% EAR, plus £6/month overdraft usage fee and daily fees up to £10 (max of 8/month).
|In-credit interest rate|
|0%.||0%.||1% for £100+, 2% for £200+, and 3% from £300 to £2,000.||0.1%.||0%.||0%.||0%.||0%.||0%.||0%.|
|Transfers accepted at graduation?|
|Yes.||No, you must have held its student account.||Applications for new graduate accounts are welcome, but transfers from an existing graduate account are not permitted.||No. Must be existing account holder.||Yes, new applications accepted. Existing student account customers will automatically be converted in July upon graduation.||Yes, if you've graduated from a UK university in the past three years.||Yes, new customers accepted. Existing student account holders will be transferred.||Yes, new customers accepted. Existing student account holders will be transferred.||No, you must have held its student account.||Yes, if you've graduated from a UK university in the past three years.|
|What account does it revert to afterwards?|
|Barclays Bank Account.||Current Account||Everyday Current Account.||Reward Current Account.||HSBC Bank Account.||Classic Current Account .||Select Account.||Select Account.||Smile Current Account.||Classic Current Account.|
|Can you get a graduate loan?|
|No.||No.||Yes, access to preferential '123' rates. Must have a 123 Graduate Current Account.||No.||Yes, you can borrow up to £25,000 at 3.3% APR (on loans of £5,000 to £25,000) up to five years after the date of graduation (subject to how you use your account).||Yes, rate depends on account history and your credit record. Available up to 5 years from graduation.||No.||No.||No.||Yes, you can borrow up to £10,000. Rate depends on your credit history. You must have the TSB Graduate Account.|
|Can you open a graduate account with another bank too?|
Best buys Top in-credit current accounts
If you don't need an overdraft after graduating, then don't go for a graduate account. These standard bank accounts have much better perks, including high levels of in-credit interest. Scan through all the picks though, as they've different perks.
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 must have an adequate credit rating (see Credit Rating guide).
Free £125 cash & rated no.1 for customer service
Of the accounts offering you cash to switch, First Direct* is our top pick, for its excellent customer service. It's won every bank service poll we've ever done, with 91% of its customers rating it 'great' - only 2% said they got poor service. You also get a small 0% overdraft, and can open a linked 5% regular saver.
- To get the £125 switching bonus, you need to use First Direct's switching service to fully switch and close your existing account and pay in at least £1,000 within three months of your account opening. Once you've made the payment, the £125 is credited to your account within 28 days.
- This account has a £10 monthly fee, but this is waived each month you either pay in £1,000, have an average monthly balance of £1,000 or hold selected other accounts with First Direct.
- You can't get the switching bonus if you've ever held an account with First Direct before.
- First Direct shares its £75,000 UK savings safety guarantee with HSBC, so ensure you don't hold more than £75,000 across the two banks.
- Minimum monthly pay in : £1,000 (equates to an annual salary of £13,100)
- In-credit interest: None
- Arranged overdraft cost: 0% under £250, 15.9% EAR above that
- Unarranged overdraft cost: 15.9% EAR, plus £25 per paid item
How do I get the £125 switching bonus? Once you've opened and been accepted for the account, you have three months in which to complete your switch (including the transfer of at least £1,000 a month). Once you've done that, the £125 bonus will be paid within 28 days.
What if I can't pay in £1,000 every month? If your salary reduces and you can no longer pay in £1,000 per month you'll be whacked with a £10 monthly fee. However, if you have another account with First Direct - savings or a mortgage - then it's waived, so just open a bog standard savings account, and put the minimum amount in.
Can I open two of these accounts? You can open two accounts if the second one is a joint account, but you'll only get the switching bonus once (as it's only for new customers). Plus, opening a joint account financially links you with the other person, so think carefully before doing so.
Are there any other perks? There aren't any additional perks on the bank account - but you'll be eligible to open up its linked 6% regular savings account.
Up to 3% interest on £5,000 (+ trick to get it on £15k), though this rate could be cut
Bank of Scotland Vantage
The Bank of Scotland Classic Account pays 3% AER variable on balances between £3,000 and £5,000. Its interest rate is unmoved since August's UK base rate cut which has seen several other banks slash their rates, so it could change - yet it must give 60 days' notice if it does.
There is a trick in that the rules allow you to open three, giving you 3% on £15,000. You will still need to meet the criteria on each though - see our multiple account tips below for help.
- The interest doesn't automatically come with the account – you need to add 'Vantage' to the account to get it. You can do this during your application.
- You'll need to pay in £1,000/mth, stay in credit, and have two different direct debits paid from the account(s) each month to get the interest.
- If you've less to save, you'll get 1.5% AER on £1 to £999.99 and 2% AER on £1,000 to £2,999.99.
- Bank of Scotland shares its £75,000 UK savings safety guarantee with Halifax.
- Multiple accounts tip one: Some MoneySavers have found issues if you try to open the second or third accounts too quickly. Waiting 48 hours between each and calling up instead of applying online seems to make things easier.
- Multiple accounts tip two: You can recycle £1,000 to meet the pay-in criteria - simply set up a standing order to move it from account one to account two then two days later to account three, but remember to keep cash in to pay the direct debits.
- Multiple accounts tip three: If you don't have enough direct debits, set up small direct debits to specific savings accounts or, even to charity. Bank of Scotland doesn't care where the money is going, as long as they're direct debits. See full alternatives.
- Minimum monthly pay-in: £1,000 (equates to £13,100 annual salary)
- In-credit interest: 3% AER variable if you've £3,000 to £5,000 (on entire balance); 2% on £1,000 to £3,000; 1.5% under £1,000; nothing above £5,000
- Arranged overdraft cost: £25 buffer, then 19.89% EAR + £6/mth usage fee
- Unarranged overdraft cost: £10 buffer, then 19.89% EAR with charges of £5/day between £10 and £25 over limit, £10/day for £25+ (max £80/mth); £10 unpaid item fee (max three/day)
How much interest can I earn? You can earn 3% AER on the entire balance if you have between £3,000 and £5,000 in the account, but no interest on anything over that amount. Put and keep the full £5,000 in, and you'll get £148.
If you've less to save, you'll get lower rates of interest – 2% AER between £1,000 and £2,999.99 and 1.5% AER between £1 and £999.99.
Can I have more than one account? You can open three of these accounts. But each needs to be operated as if it's a main account, so you need to pay in £1,000 to all three each month, have two direct debits going out, and stay in credit to get the interest.
For the full range of our top pick accounts, see the Best Bank Accounts guide.
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