After the first euphoria of graduation and the heavy partying is over, it is time for recent graduates to come back down to earth and think about the future, including getting their finances sorted
More than 230,000 students graduated this summer, and most of them will have accumulated some kind of student debt while at university. While graduates will hardly be able to do much about their debt immediately while still looking for their first job, the least they can do is not let it grow any further.
First of all, new graduates should find the best current accounts
for their particular situation. Most of them will have been on a student bank account
with beneficial rates and terms such as an interest-free overdraft for the duration of their studies.
However, after graduation the bank might withdraw these benefits and the new graduates may suddenly face soaring overdraft charges if they do not keep an eye on their spending and the balance of their current accounts – and consider switching to one of the deals available for new graduates.
"Graduation is a big step ahead into a new phase of your life," Ed Kendall, spokesperson for Fairinvestment.co.uk
, says. "It's also a great opportunity to take a step in the right direction to get your finances organised."
Many Britons hardly ever think about their current accounts, and even less about switching to another bank. According to the Office of Fair Trading just six per cent of bank customers' switched current accounts in the past twelve months.
However, the interest rates, benefits and extras offered differ considerably from provider to provider and customers could potentially save themselves hundreds of pounds looking for a better deal.
"The same applies to graduate bank accounts
," Mr Kendall adds. "Why would you want to stay with the bank you had your student account with if other providers offer you much better deals? Forget your loyalty to your bank – you will fare much better if you look for what is best for you right now."
"When you are in the process of finding your first job and don't have any money to spare, it is important to keep your bank charges at a minimum. Therefore a high interest-free overdraft should be on top of the list, then the fees and charges you incur should you go over your agreed overdraft limit."
All major banks including Abbey, Barclays, HSBC, Lloyds TSB, RBS and NatWest offer graduate current account packages with free overdraft facilities which decreases over two to five years.
Most of them offer additional benefits such as discounts on tickets or insurance, but Mr Kendall warns: "Don't be fooled by incentives such as free railcards or mobile phone insurance – they are baits the banks offer to get you on the hook, but don’t really save you any money."