Best Graduate Bank Accounts 2022
Get to grips with graduate banking and you’ll be better off for up to three years after uni. Avoid the fees and switch to a better deal – here’s how!
From 0% overdrafts to freebie incentives, Student Bank Accounts offer some great deals.
Graduation doesn’t have to mean suddenly missing out on all the bank account perks, though. We’ll show you how to make the most of student banking benefits by getting an account that’s specifically catered for those post-uni.
You can be eligible for a graduate bank account for up to three years after your course ends.
6 tips for choosing a graduate bank account
Here’s how to find the best graduate bank account for you:
1. Switch bank accounts
When it comes to banks, loyalty rarely pays off. Staying with the same bank for a long time generally doesn’t come with any extra perks. These are usually reserved for new customers who enjoy introductory rates as an incentive for switching. And thanks to the Current Account Switch Service, switching to the best graduate bank account has never been easier. Behind the scenes, all of your incomings and outgoings will be switched from one bank to another, meaning you don’t have to handle any of that stuff (like updating Direct Debits) yourself.
2. Choose a longer-term 0% interest overdraft
If you’ve graduated in the red, your main aim should be to source the graduate account offering the longest 0% overdraft. But do what you can to avoid taking on more debt than you already have.
While the main aim of your student bank account was to allow you to borrow in order to get through your uni years, the purpose of a graduate account is to give you a few years to pay off what you owe before it starts gaining interest.
As such, try to choose the graduate bank account with the longest 0% overdraft available. This will give you more time to pay it all back.
3. Choose a bank account that pays interest
If you find you tend to be good at budgeting and can stay out of your overdraft, you can really benefit from accounts that pay interest. In this case, we’d recommend finding an account with a decent interest rate on a positive balance. This will essentially be a way to earn free money. It could potentially mean switching to a standard current account, not a graduate one. Other incentives like cashback, payouts for switching banks, and extra freebies are also worth looking into. But, don’t let one-off freebies cloud your judgment too much.
4. Check your credit rating before you apply
Before you make your decision on which account to go for, it’s worth taking the time to check your credit rating. Most of the 0% overdraft facilities you’ll find in graduate accounts will be variable (e.g. “up to £3,000”). So, it’s possible you won’t qualify for the full amount, depending on how your credit score is looking. Banks will use your banking history (past borrowing, income stream, etc.) to decide how large your 0% overdraft limit should be. If your credit rating isn’t great, it’s worth scoping out an account that offers a guaranteed overdraft amount that isn’t based on your rating. Alternatively, try a few steps to improve your credit rating.
5. Budget to quickly clear your overdraft
Don’t use the interest-free overdraft as a chance to spend more money. Your graduate account is your last chance to pay back what you already owe before you start paying interest on it. It is possible to set up your graduate account a year after graduation. But, if you wait around, you’ll enter into the second-year overdraft limit, which is often lower than the first year. These accounts are calculated from your graduation date. Graduate account overdrafts decrease on a sliding scale for each year after you graduate. Depending on your account, you could see yours drop by up to £1,000 each year!
6. Don’t go over your overdraft limit
If you go over your arranged overdraft limit, you could be looking at additional charges for each transaction (whether the bank honors the payments or not). It’s expensive and makes your debt even harder to clear. So, avoid this as much as you possibly can. Plus, if you consistently mismanage your account, the bank may even reduce or remove some account features (including your overdraft).
Graduate loans are different from Student FinanceYou may be offered a bank loan as part of your grad package. But think carefully before grabbing the cash. Some banks even offer up to £25,000 to graduates, which is a lot of cash (and therefore a lot to pay back). Commercial loans work quite differently from Maintenance Loans. For one, you may be expected to start repaying the money almost immediately. Unless you’ve got a guaranteed income, this could be more stressful than it’s worth.