Banking for graduates

Now that this year’s graduates are starting new jobs (if they’re lucky), most will have student debt that they will need to deal with.

Switching to a current account after a degree will mean an end to those interest-free overdrafts. But shopping around for a banking deal can extend chances of a free loan. Those with bank debt (not the official student loan, which comes out of a salary), should opt for the account offering graduates the best interest-free overdraft.

Lloyds TSB and Royal Bank of Scotland are both offering graduates £2,000 for one year after university, £1,500 for the second year and £1,000 in the third. However, if you need to borrow more from Lloyds, it will charge 17 per cent interest. At RBS, further agreed lending is at the lower rate of 10 per cent but unauthorised borrowing costs 18 per cent interest, plus charges.

Take time to compare options, but note that these accounts are only open to those who complete their degree, and only available for up to three years after graduation. Since the annual allowance drops every year, you’ll also need to put away money to ensure you can pay back the overdraft before the deadline.