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Graduate Accounts

Cut the cost of post-uni banking

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Sally and Helen S | Edited by Johanna

Updated August 2017

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

The five BIG need-to-knows

  • Overdrawn? Get the biggest 0% deal possible

    The ultimate goal is to get a 0% overdraft to cover your full overdraft debt for as long as possible.

    First check what your existing bank offers, then compare to the top deals for switchers below in our top 0% graduate overdrafts section, though be aware that you'll need to pass a credit check to get a new account.

    This isn't about borrowing more. The aim is that by not paying interest, more of your money goes towards clearing your actual debt – and do it ASAP as the 0% won't last forever.

  • 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 2015 or 2016, 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. Banks try and encourage this by reducing the maximum 0% overdraft each year – the idea being that by the time the 0% ends you'll have paid it off.

    For a £2,000 overdraft which reduces gradually over three years, repayments need to be at least £56 a month. In other words, at the end of each month, your total overdraft should be £56 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!).

  • 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 2017/18

To be a winner here, banks must offer the biggest 0% overdrafts for the longest period.

All limits are "up-to" amounts, so you're not guaranteed to get them – how much you get depends on your credit score.

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 check (see Credit Rating guide).

Santander

Up to £2,000 0% overdraft limit and what you get's set for two years

Santander

One of the largest 0% overdrafts for graduates comes with Santander's 123 Graduate Account. Unlike many other graduate accounts, your 0% overdraft limit won't drop after the first year – it stays the same for both years you can have the account. However, this does mean you need to be self-disciplined to ensure it's paid off by the time the 0% ends.

Need-to-knows
  • 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.
  • After two years, the account will be transferred to a standard Santander account.
  • Santander shares its £85,000 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, eg, a linked 5% regular saver.

How Santander rates on service (in credit)

55% Great

38% okay

7% poor

Date: Feb 2017 Voters: 241

Stats box
  • 0% overdraft: 1st year after graduation, up to £2,000; 2nd year, up to £2,000
  • Arranged overdraft cost: No fees
  • Unarranged overdraft fees: £5/day (max 10 days per month) plus £5/£10 paid/unpaid fees per item. Max charges £95/mth (£50/mth from 10 July 2018)
  • In-credit interest: 1% for £100+, 2% for £200+, and 3% from £300 to £2,000
Barclays Bank logo

Up to £3,000 0% overdraft in first year, but less in subsequent years

Barclays

Another decent option is the Barclays Higher Education Account. On the surface this may seem more attractive than Santander above given the possible £3,000 0% overdraft limit.

But like many other graduate accounts the maximum is only in year one, and you get less in subsequent years – up to £2,000 in year two and £1,000 in year three. Santander gives a constant limit for two years. Of course, Barclays' lowering limit provides a clear goal to help you clear the debt quicker but is also risky were you to miss that goal.

Also, if you sign up to its Blue Rewards scheme, for a £3 monthly fee, you'll get at least £7/month back – as long as you pay in £800+ and pay out at least two direct debits each month. You can get even more if you hold selected Barclays products.

Need-to-knows
  • You're not guaranteed to get the maximum £3k overdraft – it depends on your credit record.
  • There's no in-credit interest, so you won't be rewarded if/when you get out of your overdraft.
  • After three years, you'll be transferred to a standard Barclays account.
  • Barclays shares its £85,000 UK savings safety guarantee with Woolwich, which it owns, so credit balances are protected up to this level.

How Barclays rates on service

41% Great

40% okay

19% poor

Date: Feb 2017 Voters: 414

Stats box
  • 0% overdraft: 1st year after graduation, up to £3,000; 2nd year, up to £2,000; 3rd year, up to £1,000
  • Arranged overdraft cost (above limit): No fee up to £1,000; 50p/day between £1,000 and £2,000; £1/day for amounts over £2,000, max £3,000
  • Unarranged overdraft fees: No unauthorised overdraft available, but £8 per day as a service fee for unpaid items
  • In-credit interest: None

Compare all graduate accounts

Graduate accounts are offered by 10 high street banks – we've basic info here about the overdrafts you could get, though no bank offers a guaranteed overdrafts - whether you'll get one depends on your individual circumstances.

All graduate accounts compared
Bank account Max fee-free overdraft limits Cost of overdraft £100 over fee-free limit Can you switch to this account after graduation?
Halifax Student Current Account £3,000 in the first year only. £4.34

No

HSBC Graduate Bank Account

Up to £1,500 in year 1 and up to £1,000 in year two.

£1.55

Yes; must prove you graduated less than two years ago

Lloyds Bank Gradute Account Up to £2,000 in year 1, up to £1,500 in year 2, and up to £1,000 in year 3. £4.34

No

Barclays Higher Education Account Up to £3,000 in year 1, up to £2,000 in year 2, and up to £1,000 in year 3. £31 in year 2. £15.50 if over £1,000 and £31 if over £2,000 in year 3.

Yes; must prove you graduated less than two years ago & have a job (offer)

The Co-operative

Up to £2,000 in year 1. Not available in years 2 and 3.

£0.81

No

Santander 123 Graduate Current Account Up to £2,000 in year 1 and year 2. N/A Yes; must prove you graduated less than three years ago & have a job (offer) & pay in salary each month
Nationwide FlexGraduate Up to £2,500 in year 1, up to £1,750 in year 2, and up to £1,000 in year 3. N/A No
NatWest Graduate Account Up to £2,000 in year 1 and up to £1,000 in year 2. N/A Yes; must prove you graduated less than three years ago
RBS Graduate Account Up to £2,000 in year 1 and up to £1,000 in year 2. N/A

Yes; must prove you graduated less than three years ago

TSB Graduate Account

Up to £2,000 in year 1, up to £1,500 in year 2, and up to £1,000 in year 3

£7.33 (incl. £6/mth usage fee)

Yes; must prove you graduated less than three years ago

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 pay up to £125 to switch, and the top deals also have more perks such as linked 5% regular savers, additional vouchers and monthly cash rewards.

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).

For the full range of our top pick accounts, see the Best Bank Accounts guide.

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