Everything you need to know about… Graduate Overdrafts
Okay, it’s not really that bad. Your bank will upgrade you to a very respectable-sounding ‘Graduate Account’ and will notify you of the terms of your overdraft. It’s likely that you’ll be given a fair amount of time to pay your overdraft back, which will usually result in one of two things.
– Either your bank will allow you to pay your overdraft back by introducing a small amount of interest after a while, increasing the interest in increments until it is paid off.
– Your bank will reduce the size of your interest-free overdraft, again in increments, as time goes along, until it is fully paid off.
Pretty much the exact same thing – what’s important is that you know exactly how much you need to have paid off by certain times and how much interest you will have to pay back.
Banks are also quite understanding, regardless of what tabloid papers would have you believe. If your situation dictates that you can pay your overdraft off early, then that can quite obviously be sorted. Conversely, if you’re struggling with the repayments of your overdraft, going travelling or any such-like – it’s worth speaking to your bank and seeing what they can do. Here are the four major student and graduate bank account hosts and what they provide:
NATWEST: £2,000 for the first 3 years after graduation:
Year 1- Completely interest-free.
Year 2 – £1,000 of the £2,000 overdraft is interest-free.
Year 3 – £500 of the £2,000 overdraft is interest-free.
LLOYDS: Beginning with a maximum of £2,000 overdraft as a student:
Year 1 – £2,000 overdraft is interest-free
Year 2 – £1,500 overdraft is interest-free
Year 3 – £1,000 overdraft is interest-free
HSBC: Beginning with a maximum of £1,500 overdraft is interest-free:
Year 1 – £1,500 overdraft is interest-free
Year 2 – £1,000 overdraft is interest-free
BARCLAYS: Overdraft incurs a £7 per month charge, but includes freebies such as mobile insurance:
Year 1 – £3,000 overdraft – bank lowers the ‘interest-tiers’ in the subsequent years.
As with everything guys, this sort of information is subject to change, so it is worth having a look about on the banks’ websites or making an appointment to speak to someone there!