Students urged to get accounts in order

17/07/2009

Recent graduates must get their finances under control by selecting the best bank account for their needs, Moneyfacts.co.uk said yesterday.

The financial information website said that graduate accounts currently on the market vary widely - and that different products would suit different financial concerns.

For example, the Barclays Bank Graduate Additions account offers an extra £1,000 in interest-free overdraft capacity compared with any other on the market, but charges a £5 per month fee as a consequence.

Credit interest also varies across the market from zero to 1.02 per cent.

Moneyfacts.co.uk pointed out that most of Britain's students are currently leaving university with five-figure debts - which they are obliged to pay off over the years to come.

Louis Kaszczak, head of the site, commented: "In order to get your student debt paid off, the first thing you need to do is to work out exactly how much you owe. Then you can work out a monthly budget and decide how much you can afford to repay towards your debts."

EuroDebt director Kevin Still said: "Many students leave University with bank accounts that offer zero percent interest on overdraft balances for a period of time after they graduate. One of the initial challenges is to select a current account provider that will then assist the process of budgeting and managing accumulated debts over a meaningful period of time once interest starts to be applied. Targeting high interest accounts like store cards should be a priority and trying avoid further use of extended unsecured credit should be important whilst the gap between net income and expenditure is fairly tight."

He added: "EuroDebt has launched a pre-paid current account with Secure Trust Bank to help people like newly graduated students that need to be able to budget effectively and need a bank account irrespective of any financial difficulties they may have had in the past. The account provides clear separation between funds required to pay priority direct debits and standing orders.

"Disposable income is swept onto a pre-paid card that can be used for purchases or cash withdrawals. There are no charges for failed direct debits and standing orders. A savings account can be linked to the current account to effectively budget for annual expenditure items, like car servicing or MOTs."

Tags; Debt Management and Banking, Recent Graduate Debt,

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