Graduate from your student bank accounts

On leaving university, searching for the best current account provider may be the last thing on many graduates’ minds. But by taking the time to shop around they could find an account more suited to their circumstances, and possibly even save some money.

"With only six mainland UK providers, choice is somewhat limited, however the packages do vary considerably. Graduates will often remain loyal to their student account provider, but with proof of qualification they can possibly change providers up to three years after graduation," says Lisa Taylor from Moneyfacts.

"Job prospects and salary expectations provide pleasing reading for this year’s graduates, but this does come at a cost. The latest graduate debts figures in the Barclays 2005 survey showed average graduate debt for the previous year rising 12% to £13.5K. As the table below illustrates, majority of graduate debt lies with the Student Loans Company (SLC), but worryingly banks and credit cards also hold substantial debt for many.

“So taking the time to choose the ‘best’ current account provider could prove to be time well spent.

What factors should graduates be looking for?

Graduates need to think carefully whether they should be moving to a graduate bank account or just a straightforward current account. You need to weigh up the options and the pros and cons carefully.

Interest free overdraft limit
The interest free overdraft limits is a key feature, ranging from £1K to up to £3K in the first year. In all cases these limits will reduce over time, for example accounts with Abbey and NatWest tier down to a maximum of £500 in year three.