Graduate accounts are day to day current accounts aimed at those finishing higher education. They usually offer extra benefits not available to ordinary current accounts. They usually last for 3 years after graduation, but some only last a year. Some banks define a graduate as someone who has found full time employment after university, however for other banks simply graduating is enough.
Some student accounts will be extended for a year after graduation to allow you to sort out your finances, but it is more likely that you will have to sign up for a graduate account.
Choosing a Graduate Account
If you have a sizeable debt then it is best to choose a graduate account with the longest lasting interest-free overdraft.
Those who are debt free (not including student loans) should still choose an account which has an interest-free overdraft facility in order to invest this money to profit from the interest.
Some accounts charge a fee for interest-free overdrafts, but there are enough high street banks offering this for free. Double check the small print, as Barclays charges £5 a month just to hold a graduate account.
If you have a Halifax or Bank of Scotland Student Account stick with it. All student accounts are automatically given an interest-free overdraft of £2750 for the first year following graduation. Once that year is up, you can then transfer to the next best graduate account or 'normal' bank account.
The Royal Bank of Scotland and Lloyds TSB both offer a 3 year interest-free overdraft of £2750. Lloyds state that the size of this overdraft is guaranteed while RBS decide theirs on a case by case basis.
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The Best Graduate Accounts
Alliance & Leicester Premier Direct Current Account
Max. Interest Free Overdraft – £2500 (1 year)
Overdraft Charge – 0% (50p per day [£5 max per month] after 1st year)
Unarranged Overdraft – £5 per day
Interest on in-credit balances – 1% (6.5% for first year on balances up to £2500)
Other Features – Must pay in £500 p/m and be over 21
Royal Bank of Scotland Graduate Royalties Account
Max. Interest Free Overdraft - £2000
Unarranged Overdraft - 29.84% (and £10 maintenance fee)
Interest on in-credit balances - 1.02%
Other Features - overdraft decided on a case-by-case basis
Abbey Graduate Account
Max. Interest Free Overdraft - £2000 (£1000 year 2; £500 year 3)
Unarranged Overdraft - 28.7%
Interest on in-credit balances - 1%
Other Features - must be 19 or over
Lloyds TSB
Max. Interest Free Overdraft - £2000 (£1500 year 2; £1000 year 3)
Unarranged Overdraft - 16.8%
Interest on in-credit balances - 0.1%
Other Features - Must pay in £500 p/m
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