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Don't stick with your student bank account after uni. Banks love graduates (and the dosh they bring) so offer special deals unavailable to others, such as 0% overdrafts for up to three years.
If you graduated in the past three years, check, ditch & switch to save �100s.
In this guide
The five BIG facts
If overdrawn, get the biggest 0% deal possible
If you are already overdrawn on your existing student account, look for the biggest and longest-lasting interest-free overdraft. But this isn't about borrowing more. The aim is that by not paying interest, more of your money can go towards clearing your actual debts. To find the right deal, see the 0% graduate overdraft section.
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.
Therefore, even if you graduated in 2010 or 2011 you may still be able to gain by switching to a graduate account now.
Use your graduate 0% to wean yourself OFF overdrafts
You'll have to pay it off at some point, usually after two or three years. Fail to do so and you'll be subject to charges and fees.
The aim should be to gradually reduce the overdraft so that by the time you're being charged for it, you no longer have one. Think of it as a debt that you'll need to 'pay some back' on each month.
For a �2,000 overdraft which reduces gradually over 3 years, repayments need to be at least �55 a month. In other words, at the end of each month, your total overdraft should be �55 less than the prior month. To help, use the Free Budget Planner and Money Makeover guides.
Likely to be in credit? Max out your interest
If you're one of the lucky ones who will be in credit for much of your first few years of banking, forget overdrafts and focus on the accounts which pay the most interest.
These tend to be standard bank accounts rather than special graduate deals. 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.
Alternatively, if you're super-savvy financially, you could make even more money by utilising 0% overdrafts. See Current Account Stoozing below.
Never go over your overdraft limit - BUDGET!
Budgeting isn't a rule just for graduates, its 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, at least talk to the bank. Try to agree an extension but remember, you are likely to be charged interest between 9.9% AER and a huge 19.9% AER. 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 �25 per transaction (so a shopping trip in 5 shops spending �30 on your debit card could see you facing �125 of charges!). More info in Bank Charges Compared.
Top graduate 0% overdrafts 2012/13
To be a winner here, banks must offer the biggest 0% overdrafts for the longest period. If you think you've seen accounts offering higher limits, be wary - the limits below are 'guaranteed' but others publish 'up to' amounts - so ensure you're comparing like with like.
All of the following accounts require you to pass a credit score (see Credit Rating guide).
Existing Halifax student account holders should not switch
Don't automatically switch if you've a Halifax Student Account
Some existing Halifax student account holders get a �3,000 interest-free overdraft for the first year of graduation as an extension of their student account.
Therefore, if you're with Halifax and already have an overdraft bigger than �2,000, you may want to stick with it for this year, then switch to the best graduate account next year.
Royal Bank of Scotland.�2,000 guaranteed overdraft in year one.
- In-credit interest: 0% AER
- Arranged overdraft Cost: 9.9% EAR.
- Unarranged overdraft fees: 9.9% EAR; �6 daily charge, �6 returned item fee.
- 0% Overdraft: Yr 1 �2,000, Yr 2 �1,500, Yr 3 �1,000
The overdraft available with the RBS is a GUARANTEED �2,000 (ie, it's definite, not possible) for accepted applicants in the first year after graduation, �1,500 in the second year and �1,000 in the third. Borrow more and any agreed lending is at a reasonable 10% APR.
If you want it, go quick as from January 2013 RBS will ditch the third year of overdraft for new customers, and only give �2,000 0% overdraft in year one and �1,000 in year two.
RBS�s sister bank Natwest's offer is similar, except its 2nd and 3rd year 0% overdrafts are lower - �1,000 in year two and �500 in year three - and will also change in Jan 2013
SantanderGood limits, costly if you borrow more.
- In-credit interest: 0% AER
- Arranged overdraft Cost: No fees
- Unarranged overdraft fees: �5 daily charge (max 10/month) plus paid/unpaid fees of �5/�10 per item.
- 0% Overdraft: Yr 1 �2,000, Yr 2 �1,000, Yr 3 �500
A good RBS alternative is from Santander, which also offers good interest-free overdraft limits - �2,000 in the first year after graduation, �1,000 in the second year and and �500 in the third. Not as good as RBS, but if a branch is closer you may prefer it.
Any agreed borrowing over the 0% limit, won't hit you with any arrangment fees. But go into an unauthorised overdraft, and the fees are huge, so avoid at all costs.
Seven high street banks offer graduate accounts. Compare each one to find the right account for you. Each bank has varying overdraft limits and terms and conditions.
Compare graduate accountsCheck up to three at a time to compare below
| Account Name | ||||||||
|---|---|---|---|---|---|---|---|---|
Higher Education Account |
No formal graduate account, student accounts continue for the first year after graduation |
Graduate Current Account |
No formal graduate account, student accounts continue for the first year after graduation |
Graduate Bank Account |
Graduate Account |
Graduate Account |
Graduate Royalties |
No formal graduate account, student accounts continue for the first year after graduation |
| Eligibility criteria (must be over 18 to get an overdraft) | ||||||||
Graduated within last 2 years |
Must have held its student account at time of graduation |
Either need to be working or have confirmed job offer. Must use as main account, paying in salary each month |
You must have had its student account at the time of graduation to qualify for this |
Graduated within the last 2 years and be able to provide proof of Graduation e.g. a Graduation Certificate |
Confirmation of graduation, graduated up to 3 years ago with a degree from a UK-based university. If account isn't with Lloyds/BOS, must transfer account from other provider and pay at least £500/month |
UK resident, have graduated from a full time higher education course lasting 2 yrs or more in the past 3 yrs |
UK resident, graduated from a full time higher education course lasting 3 yrs or more or completed training as a nurse in the past 3 yrs |
Must have held its student account at graduation |
| Sign up/other incentives (selected) | ||||||||
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
Eligible for Graduate Discount Card |
Discounts and card protection through Royalties Membership Service |
N/A |
| Minimum interest free overdraft limits | ||||||||
Year 1 |
||||||||
£1,500 |
£2,000 |
£2,000 |
Up to £3,000 |
Up to £1,500 |
Up to £2,000 |
£2000 |
£2000 |
£2,000 |
Year 2 |
||||||||
£1,000 |
N/A |
£1,000 |
N/A |
Up to £1,000 |
Up to £1,500 |
£1000 |
£1500 |
N/A |
Year 3 |
||||||||
N/A |
N/A |
£500 |
N/A |
N/A |
Up to £1000 |
£500 |
£1000 |
N/A |
| Are overdrafts guaranteed or on a case by case basis? | ||||||||
Free on first £200, given at account opening. Over £200, further interest-free overdrafts available on request depending on year of graduation (subject to application and status) |
At the bank's discretion |
Guaranteed providing customer credits their salary to the account |
No, case by case basis, dependant on personal circumstances. Not guranteed to get the full £3000. |
All overdraft requests are subject to status and assessed on an individual basis. |
No, case by case. Not guranteed to get the maximum limits. |
Guaranteed |
Guaranteed |
Guaranteed |
| Agreed overdrafts beyond the 0% limit | ||||||||
19.3% |
9.9% |
N/A |
7.2% |
19.9% First overdraft request in any 6 month period: free Subsequent requests: £25 |
Lloyds: 16.77% |
17.81% |
9.9% |
9.9% |
| Unauthorised overdraft rate & fees (always avoid - talk to bank first) | ||||||||
If you go past your overdraft, you'll be charged a 'Personal Reserve' fee of £22 every 5 working days, until crediting the account to clear it. You'll be told your personal reserve limit once you're accepted. Customers will pay £8 per item for a returned or guaranteed transaction, capped at five per day. |
18.9%, unpaid items £15 up to max of £150 per quarter. |
£5 per day, max 10 days per month, plus paid/unpaid item fees of �5/�10. |
24.2% EAR £28 fee per month. Returned item fee: £10 (max 1/day) |
19.9% EAR First overdraft request in any 6 month period: free Subsequent requests: £25 A Return Fee will be payable for considering and returning payment requests, eg, cheque, standing order, direct debit etc. up to £10: no charge up to £25: £10 per item above £25: £25 per item |
Lloyds:16.77% BOS: 16.8% Plus fees up to �10/day (max of 8/month). |
17.81% EAR |
17.81% EAR Monthly fee: £6 Returned item fee: �6 Max �60 in charging period (between statements) |
15.9%, unpaid items £15 |
| In-credit interest rate | ||||||||
0% |
0% |
0% |
0.1% |
0% |
0% |
0% |
0% |
0.12% |
| Transfers accepted at graduation? | ||||||||
|
Yes |
No, you must have held its student account to be eligible |
Yes |
No, you must have held a Halifax student account to be eligible |
Yes |
Yes |
Yes |
Yes |
No, you must have held its student account |
| What account does it revert to afterwards? | ||||||||
Barclays Bank Account |
Co-operative Current Account |
Everyday Current Account |
Choice of current accounts |
Bank Account |
Classic Current Account |
Select Account |
Interest paying current account |
Smile Current Account |
| Can you get a graduate loan? | ||||||||
Yes; 12.9% typical APR, can apply for loan up until 2 years after graduation |
No
|
Yes; 8.9% typical APR, available up to 3 years after graduation. Must have its graduate account |
No |
Yes; 6.2% typical APR, available up to five years after graduation. |
Yes; 9.9% typical APR, available up to 5 years from application |
Yes, 16.5% rep APR, available up to 3 years after graduation. Must have its graduate account |
Yes; 16.5% rep APR, available up to three years after graduation. Must have its graduate account |
No |
| Can you open a graduate account with another bank too? | ||||||||
| No |
No |
Yes |
No |
Yes |
No |
Yes |
Yes |
No |
Top in credit graduate accounts 2012/13
If you have a job, earn over �14,000 and are likely to be consistently in credit, go for the account that pays the most interest. These aren't specific graduate accounts, they're the best standard bank accounts - but they often beat graduate deals if you're in credit. Scan through all the picks though as they've different strengths.
However, their overdrafts are likely to be much smaller, or more expensive, so only do this if being overdrawn is a very unlikely scenario. To get any of the following you are required to pass a credit score (see Credit Rating guide).
If you are likely to be substantially in credit, then its usually best to shift larger amounts of cash into Top Savings Accounts to maximise the interest.
Free �100 plus top customer service Must earn �22,800 to get it. 
- In-credit interest: NONE.
- Arranged overdraft Cost: 0% up to �250, 15.9% above that.
- Unarranged overdraft fees: �25 paid item fee or unpaid fee of �0, �10 or �25.
- Min monthly pay-in: �1,000 ( explanation )
If you earn over �13,600 once you graduate, new First Direct* 1st account customers get a �100 bonus by transferring a salary of at least �1,000 a month within the first three months. It pays no in-credit interest, but scores very highly on customer service (see below).
Due to this, it also offers a second �100 if you switch away within a year, if you've maintained the monthly �1,000 deposits. The sting in the tail is, miss the min. deposits but keep the account open and you'll be whacked with a �10 monthly fee.
| Customer services poll (in credit and overdrawn) | ||
|---|---|---|
| Great |  |
90% |
| OK | |
8% |
| Poor | |
2% |
| Date: Feb 2012 | Voters: 825 | ||
If you were to get this, then ditch and switch between six months and a year after, the double bonus makes it an even bigger winner.
Customer services feedback
In our February 2012 poll of the top nine banks, First Direct again came top for customer service, with a huge 90% of customers saying they received great service.
Top long term: �5/monthHalifax: You must earn �14,000+ & never go overdrawn
- In-credit interest: �5/month (AFTER tax).
- Arranged overdraft cost until 2 Nov 2012: Up to �2,500: �1/day. Over �2,500: �2/day.
- Arranged overdraft cost after 2 Nov 2012: Up to �2k: �1/day. �2k-�2.5k: �2/day. Over �3k: �3/day
- Unarranged overdraft fees: �5/day
- Min monthly pay-in: �1,000 (explanation)
If you earn over �14,000, the Halifax Reward account pays a flat �5 each month you deposit �1,000. Yet if there's any chance of being overdrawn (even occasionally) do not go for this as the charges are huge and rising from Nov 2012. Pick a top overdrawn account instead.
Halifax confirmed it has no plans to change the �5/month feature, though technically it could stop it anytime. The payment is 'interest after basic rate tax' so non- or higher-rate taxpayers should claim extra or pay more via tax returns (see Interest Rates Guide).
| Customer services poll (In credit) | ||
|---|---|---|
| Great | |
36% |
| OK | |
46% |
| Poor | |
18% |
| Date: Feb 2012 | Voters: 611 | ||
Customer services feedback
In our February 2012 poll of the top nine banks, Halifax showed a decline from previous votes, with 36% of in-credit customers rating it great (previously 42%). 18% rated it poor, worse than the August 2011 result of 15%.
As always MoneySavingExpert.com ranks by rate, yet we wanted to bring you this feedback as it's important to realise you may sacrifice some customer service for this gain.
If you're interested in free European travel insurance or cashback on household bills, see the Best Bank Account guide for further options.
You may make even more stoozing current accounts...
Please don't even read this unless you're an anally-retentive financial superhero, as the consequences of getting it wrong can be a real problem and with low savings rates the current returns just aren't that good anyway.
Yet for the sake of the theory, even if you're likely to be mostly in credit you could choose the biggest and longest-lasting interest-free overdraft and use a technique we call 'current account stoozing' to make money (see stoozing guide for full definition of the word).
Once you get the account, take cash out of it and pop it into top-paying instant access savings (see Top Savings and Cash ISA guides) leaving yourself reasonably near, but never over your overdraft limit (and enough room to do normal spending). Always beware any limit changes.
As a result, you're earning interest on money the bank's lent you for free, giving potential profit of around �120. However, this isn't an excuse for spending or borrowing more. If you're not financially disciplined, please DON'T try it.
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