‘Graduates should shop around’
August 17, 2009 at 2:28 pm
Many students have recently graduated and most are now either frantically job hunting, or else having decided that the job market is so dire at the moment, they are planning a spell abroad. What most of them are not doing is researching which graduate bank account they should opt for, which, given the huge student debt which many have amassed whilst studying, is the very thing that they should be thinking carefully about.
Too many students stick, either through laziness or loyalty, with the bank they have used as an undergraduate. Instead they should be looking at all their options and not just staying put or opting for the bank that offers the best freebies.
The amount of interest-free overdraft offered to graduates varies from bank to bank and some will carry a charge so it is well worth checking all the options and doing some sums. For instance, banks such as the Abbey, NatWest, Lloyds and RBS offer a £2000 interest-free overdraft in the first year after graduating but Barclays offer £3000 for a monthly charge of £7. Depending on whether you think you will need the extra £1000 the Barclays account could make financial sense. If you were to run up that extra £1000 overdraft with one of the other banks it would set you back around £1800 for a year.
It is also important to check the rates for authorised borrowing, should you need more than your interest-free overdraft and also the unauthorised borrowing rate just in case you end up in the red by mistake.
Finally though, Andrew Hagger of Moneynet.co.uk advises new graduates not to fret about their student loan too much since it is one of the cheaper forms of borrowing; in fact if you have run up a credit card debt it makes good sense to pay that off first.
