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Bank Accounts & Overdrafts: Solving the graduate dilemma
Three or more years ago we all signed up for our student bank accounts with a nice clean overdraft, our first credit card and the added bonus of a railcard or fifty pounds in cash.
After abusing the aforementioned overdraft facility over the last few years, it is more than likely that your bank is trying to claw it back with an annual reduction, usually £500 each year.
Mates rates? Don’t count on it!
Unfortunately, banks are not our friends! However, we are a useful commodity and as graduates we will, on average, earn more than our non-university educated friends. Therefore, it’s in the bank’s interest to keep us. Most people simply stay with their existing bank after they have graduated, but why?
Well, people just do! They stay with the same bank long after they have graduated and well into their working life. This is perfect for the banks, but not so good for you.
I did the same for the first ten months after I graduated. I mean, who can really be bothered to change their account, get a new card and learn a new pin?
Sure, it might be a bit of a pain in the behind, but trust me, you should do it!
I had a student account with one of the world’s biggest banks and when I’d finished university my overdraft limit was set at £1500. As you would expect, this was maxed out and it pretty much remained at that level until the bank sent me a nicely worded letter informing me that the last £500 of my overdraft would start having interest charged on it. Hmmm I thought, that doesn’t sound good!
Ch-ch-ch-ch changes! Don’t want to be a richer man?
One Saturday afternoon, I set off into town to pick up a few graduate account booklets and was I pleased with what I found. The best offer I came across was from another major bank that was offering a £2000 interest-free overdraft. Not only was it larger than my current overdraft, but it was completely interest free!
Before you could say “this is going to be a hassle,” I was sitting in front of an employee having my details entered into the computer. Once the credit check was out of the way, I walked out of the bank with a stupid smile on my face, feeling that I had done pretty well for myself.
Was it stress free?
Yes it was actually! They sent out my card, my pin, my cheque book and that other book which is a mixture of cheques and giro (whatever they are?!). They even transferred over all my direct debits. Oh, and I didn’t have to speak to my old bank once; the new one did everything!
If I have learnt anything in the last few years, it would be this: every time you open a bank account, you come out smiling like a stamp enthusiast in the post office.
I’m still not looking forward to the end of my interest-free grace period, but at least it bought me some time. Hopefully, by the time it runs out, I will be earning a decent salary.
It is definitely worth shopping around and seeing what your bank can do for you! They are more likely to offer you something to make you stay, rather than to lose you to a rival.
So on that note, I’m going shopping!