As a new graduate, it’s only natural that your focus is on everything but switching or opening a bank account. Who needs that sort of hassle, right? However, before you dismiss the idea, there are some points you should consider.
Having a graduate account could give you time to repay your overdraft without the extra fees or provide a bit of relief between your initial paychecks. Considering this is potentially the first year without a guaranteed financial boost, you may find the overdraft buffer a big help as you navigate the world of work.
It’s probably a given that you don’t have those spare undergraduate hours anymore and can’t afford to waste time researching the latest perks of each account, so to help here’s 5 top tips to consider that’ll ensure you make the right decision without wasting precious time!
1. Consider your personal circumstances
Before adding to your mountain of tasks, take a look at who you currently bank with. Chances are you’ll need to change from your student bank account to a graduate one. All it could take is a quick google or call to enrol and hey presto you’re done in less than 5 minutes.
However, if you’re not happy with your current provider and are looking to switch it’s a good idea to narrow down what you are looking for. Thinking of your own banking preferences, for instance, say you prefer online banking. There’s no point picking a provider because there’s a branch up the road: you need a bank with an easy website and possibly a reliable mobile app.
It’s also a good idea to think about your financial position and future goals. Some banks offer larger overdrafts which could help between pay checks but could be risky if you rely on it too much. If you’re keen to start saving your earnings you might need to consider current interest rates, as well as the overdraft.
Given that in the current climate, it could be difficult to find a graduate job, perhaps the best thing to consider is actually the length of time you hold the account for as some banks only offer two-year accounts.
2. Do your own research
It can be a huge pain hopping between sites to compare different offers. Fear not as Save the Student has a handy comparison table summarizing the key information you need about each of the 0% overdraft graduate accounts.
You don’t have to just take their word for it though, as part of your research it’s a good idea to ask peers or others for their experience with particular accounts to get a better understanding.
No matter what you decide, it’s important not to settle for your current provider if you’re unsatisfied. It’s very rare these days to be rewarded for loyalty to a bank, so what’s the harm in trying something new?
Although it’s so easy to switch accounts, don’t get caught out, in your research check who you can switch to as certain banks including Nationwide and Lloyds who don’t allow you to switch; you must instead transfer from their student account first.
3. Know your credit score
Checking your credit score can feel as daunting as your first day at a new job, especially if you don’t know what to expect. There are a number of different sites to use such as Experian | Credit Scores, Reports & Credit Comparison. There are a number of other sites that offer the same services, all of which are free!
It’s pretty common with graduate accounts for them to run a financial background check first, after all overdrafts are a form of short-term borrowing. Though this is nothing to worry about, it could impact your credit score therefore it’s recommended you know where you stand.
There are a number of easy ways to improve your credit score as well as many products targeted at those with poor credit scores (or people who just need to boost theirs).
4. Interest rates
Yet another key thing to note, interest rates, though there might not appear to be too much between different providers it all adds up over time. Interest rates can change quite frequently depending on both your bank and what the Monetary Policy Committee sets as bank rate. But, to keep it simple, there are the two points to consider.
Firstly, what interest will you gain from your balance? In recent years banks have slowly reduced interest paid and this year the trend has remained. Taking Santander as an example, they offered 3.00% AER on balances over £300, however will be changing this to no interest paid on balances beginning 12th April 2021.
The second point to check is how much you’ll be charged in your overdraft. Luckily for most graduate accounts, the agreed limit has a 0% interest charge. However, if you go over, you’ll likely be charged around 39.9% EAR, that’s not including additional charges. These charges are also fairly close between providers so it’s just as important to note when you’ll be charged should you exceed the limit. You can also set up alerts with many banks to ensure you know before you’re close to your limit.
5. Your graduate overdraft
The fifth and final point to consider is your overdraft. It certainly is the best perk of the account but if you’re not careful you could end up paying with a bad credit score. Just to recap, most graduate accounts offer 0% interest arranged overdrafts of up to £3000. Having said that, don’t be your own worst enemy; picking the biggest offer is not clever if you can’t pay it off. A provider offering a flexible overdraft is probably a smart plan, that way the support is there, but you’ll begin to get used to having lower amounts to fall back on.
Having a graduate account that works for you is one more thing to make your life easier and one less thing to worry about, so you can get back to watching TikTok videos. Plus, on that note, there’s one thing you can tick off your to-do list today.
Read more:
- Top Money Saving Tips for Students
- How to manage stress as a university student
- Time management tips when studying
- How to stay healthy at university
Written by Kayleigh Peplow-Woolf
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