Financial planning for graduates

Switch to a graduate account

The banks are always keen to attract graduates because they expect them to be good earners in the future. They will consider you for a graduate account up to three years after you have graduated.

Compare the products available in the marketplace. Ignore incentives such as discounts at shops and restaurants you'll probably never use - it's the figures that count.

Graduate accounts offer preferential interest rates on personal loans and 0% rates on overdrafts but interest rates and terms vary greatly. You need to be shrewd: Look at terms on free overdrafts; interest rates on extended overdrafts and personal loans; and fees for going over the overdraft limit.

For example, Barclays offers interest free loans up to £3,000 in year one, £2,000 in year two, £1,000 in the third year and £500 in the four year but there is a £5 a month fee. HSBC has no monthly fees but offers interest free loans of £1,500 in year one and £1,000 in year two. Check out the interest rates on extending your overdraft. For example, Abbey will charge you 9.9% and Barclays 15.6%. If you expect to need a personal loan as well, you need to compare interest rates here as well.

Beware of unauthorised overdrafts - the interest rates may be outrageous. NatWest charges 17.81%, Barclays charges 27.5% whereas Lloyds TSB will make you pay 29.8% plus a fee of £30 a day (up to £90 a month).

Checklist for financial recovery

• Draw up a budget



• Switch to a graduate account



• Set goals for repaying debt, perhaps two years or five years



• Pay off the most expensive debt first



• Don't rush to repay cheaper student loans



• Pay back loans and credit cards using direct debits - that way you know they'll be paid and you won't be tempted to spend the money



• Review your finances every year to check you're on target and always shop around to see if you can get a better deal on loans or credit cards.



• Don't take on new loans you can't afford



• Deal with bills when they arrive - don't let them mount up



• Don't bury your head in the sand; if your debts are getting out of control, talk to your bank or seek debt advice. Free debt advice is available from National Debtline and the Consumer Credit Counselling Service