Best graduate bank accounts
Repay overdraft debt gradually without paying interest
If you've graduated recently, don't just stick with your student account – some banks let you switch to their graduate account and get large 0% overdrafts for up to three years, even if you didn't have their student account. So if you've an overdraft to repay, see if you can switch to a new account and avoid being hit with ghastly 40% interest.
First, a quick overview of graduate bank accounts...
After finishing university, many students have large overdrafts they need to repay – and if they can't do it quickly, they'll be hit with hugely expensive 40% interest.
That's where graduate accounts come in – they offer 0% overdrafts for typically three more years after your course ends, with limits that decrease each year, so you can repay outstanding overdraft debt gradually over a longer period, without paying interest.
Most banks only let you open their graduate account if you had their student account. But there are three banks that do allow you to switch – so first check what your existing bank will offer you, then check the table below to see if any can beat it.
Repay your overdraft IN FULL before the 0% ends. Fail to do so and you'll pay hugely expensive 40% interest – it can be helpful to go for the biggest 0% overdraft you can get. Overdraft limits are all 'up to' amounts, so you're not guaranteed to get them – it'll depend on your credit file.
After three years, you'll be switched to the bank's standard fee-free account. These tend to be pretty naff with few perks or rewards. So, when the bank tells you your graduate account's ending, check our Best current accounts guide.
Graduate account | 0% overdraft | How to open |
|---|---|---|
Year 1: Up to £3,000 | Branch. If switching from another bank, it must be within two years of graduating. | |
Years 1 to 3: Up to £2,000 | Online or branch | |
Years 1 to 3: Up to £1,500 | Branch |
(1) In your third year after graduation, you'll be moved to an HSBC Bank Account and you may be eligible for an arranged overdraft of up to £1,000 interest-free.
What is a graduate account?
Graduate accounts are essentially student accounts that work in reverse. They offer 0% overdrafts for up to three more years, with limits that typically decrease each year, so you can repay outstanding overdraft debt gradually over a longer period, without paying interest.
Typically, after two or three years of holding a graduate account, you'll be transferred to the bank's standard fee-free bank account. These don't tend to have perks or reward you with interest or cashback.
So, when the bank writes to you to tell you your graduate account's ending, check our Best current accounts guide. If you still have an overdraft, look at our top pick accounts if you're overdrawn.
Choose the account with enough 0% overdraft for long enough to clear your debt
Most banks only let you open their graduate account if you had their student account, but there are three banks that do allow you to switch – so first check what your existing bank will offer you, then check if any of our top picks can beat it.
Choose the account that gives you enough 0% overdraft for your existing debt, for long enough for you to realistically repay it. But don't assume you'll get the advertised maximum overdraft.
This isn't about borrowing more - this is about not paying interest, so more of your money goes towards clearing your actual debt – and do it ASAP as the 0% won't last forever.
Never go over your overdraft limit – BUDGET!
Budgeting isn't a rule just for students, it's a rule for life. Aim to get your overdraft balance below each year's new 0% limit before it drops, otherwise some of your overdraft may be subject to up to 40% interest, or you may need to repay the bank what you owe.
Compare your current debt to the overdraft limit you're offered. Understand when the limit reduces to work out how much you'll need to repay each month.
For example, if you are £2,000 into your overdraft, and your interest-free limit will reduce to £1,000 in 12 months, you'd need to repay at least £84 each month to avoid paying any interest on the borrowing once the limit reduces. Ideally, set a monthly repayment target that gets you comfortably below each limit before it changes.
If you're struggling, speak to you bank sooner rather than later to discuss support and repayment options - it may consider an extension of the 0% interest period or limit. But remember, it's always far better to plan and budget to avoid this. We've lots of info in our Debt help guide.
How to open a graduate account - what you'll need
You'll need to prove you graduated – usually within the last two years. Most banks will ask for your degree certificate or letter from your university.
You'll also need to pass a credit check. Multiple applications in a short period can affect future credit applications, so don't apply to multiple banks in quick succession.
Overdraft limits are usually 'up to' amounts, so you're not guaranteed to get them – it'll depend on the bank's assessment of your circumstances and creditworthiness. See our Credit rating guide for more details.
Don't need an overdraft? Get a top bank account
If you don't need an overdraft after graduating, then don't go for a graduate account - as these focus on extending your student 0% overdraft. Instead focus on accounts which offer perks such as free cash or vouchers for switching, linked regular savers, travel insurance and monthly cash rewards.
Some accounts have minimum pay-in amounts or other eligibility requirements, and you'll need an adequate credit rating to apply. See the Best bank accounts and Credit rating guides for more details.
With standard bank accounts, the overdrafts are often much smaller, or more expensive. So only choose one of these if you're unlikely to need an overdraft.
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