What graduate account should you get?

If you’ve graduated and don’t have a student account, or you have one, but it’s lost its free overdraft and benefits, here’s what to consider when looking for a new bank account.

If you think the banks were keen for you to open a student account with them when you started university, can you imagine how eager they are to have a graduate on their books? 

For a start, you’re not a dropout, and if you got a decent degree, you’re almost certain to be depositing ever-greater sums in your account as your career progresses.

What happens after you graduate?

Many student accounts offer an interest-free overdraft that lasts longer than your course, which means you have a few years to pay it off before interest is charged.

Student overdrafts can be interest-free for up to six years or three years after graduation.

They usually change into a graduate account after you finish your course and often reduce how much of your overdraft is interest-free each year. You’ll start paying interest on the amount you owe once the free period ends.

For this reason, it’s worth looking at the terms and conditions of your existing student account, as it could be worth considering moving to a different student account upon graduation. Alternatively, a graduate account could be worth considering.

Check your existing student account

When it comes to the T&Cs, ask your bank the following:

• Will the student account have the same interest free overdraft after graduation?

• How long will the account benefits and overdraft last?

• What fees and interest are applied after the overdraft is withdrawn?

Do you need a new graduate account?

You could always get a new graduate account with a different bank should you find one with better features. Top of the list of reasons to switch should be if your account no longer offers an interest-free overdraft or if its interest-free overdraft ends soon.

Although some banks let you switch to their graduate accounts up to three years after finishing your course, many don’t. So don’t delay searching for a better account if it looks likely that you’ll face interest charges.

Compare graduate accounts

Should you need to switch, look for the graduate account with the longest interest-free overdraft that’ll cover what you still owe. Some accounts offer overdrafts of up to £3,000.

If you find an interest-free overdraft that lasts longer than your existing bank account, you’ll have longer to pay off what you owe without any charges. 

Try not to consider this a great way to string out your repayments, as the sooner you clear your debt and start saving for your future, the better. Rather think of it as a safety net that’s there should you find yourself unable to clear what you owe in time, perhaps because you need extra cash for a rental deposit.

Some offer overdrafts that are gradually withdrawn each year, for example:

• Year one: £2,000

• Year two: £1,500

• Year three: £1,000

Switch accounts

If you’ve decided to switch accounts and use the Current Account Switching Service to do this, the move will be completed in just seven days. Your new current account will pay off the overdraft on your existing student account, and you’ll then owe that amount to your new graduate account provider.

Before that, though, your potential new bank will run a credit check to help them decide if they should accept your application and the size of the overdraft they can offer.

 What other benefits can you get?

If you don’t have an overdraft and have a positive balance, you can choose an account with other benefits like:

• Cashback

• Access to exclusive discounts

• Interest on your positive balance

• Restaurant discount schemes

What do you need?

To switch to a graduate account, you may need to prove you’ve graduated by providing a copy of your degree or qualification certificate.

You’ll also need to provide documents to prove your identity and address.