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Switching from a student bank account to a graduate bank account

Once you’ve graduated, your bank will often automatically switch your student account to a graduate account. But is it worth sticking with the same bank? Read on to find out about graduate accounts, how they work and why it might be worth switching to a better deal.

Once you’ve graduated, your bank will often automatically switch your student account to a graduate account. But is it worth sticking with the same bank? Read on to find out about graduate accounts, how they work and why it might be worth switching to a better deal.

Written by
Sajni Shah
Consumer expert on money and utilities
Last Updated
21 DECEMBER 2023
5 min read
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What is a graduate account?

A graduate account is a current account specifically aimed at people who've just graduated from university. Many graduate accounts offer similar perks to student accounts and generous overdraft deals, often up to three years after you’ve graduated.  

If you have an existing student bank account, your bank may automatically switch your student account to a graduate account when you graduate. But that doesn’t mean you have to stick with them. Thanks to the Current Account Switch Guarantee, switching current accounts is a quick and pain-free process, so it’s worth shopping around to see if you can get a better deal.  

How is a graduate account different from a student account?

Once you’ve graduated, you’ll no longer be eligible for a student account - and that’s why you might be automatically moved to a graduate account.  

The main difference is that the overdraft limit on a student account usually remains at the same limit for the duration of a full-time course - be it three or four years. With many graduate accounts, the overdraft limit automatically goes down each year. The reason for this is that it’s hoped you’ll gradually pay off your overdraft, once you’re working. How much the overdraft limit will decrease can vary among providers.  

So, while a student account allows you to borrow to help get you through your uni years, a graduate account with an interest-free overdraft gives you extra time to pay back what you owe. It’s a good opportunity to start balancing your budget and managing your finances after graduation.  

Can I open a graduate account with a different bank?

Yes, you don’t have to stick with your current bank when you open a graduate account, especially if you find a better deal elsewhere. You’ll usually be able to transfer an outstanding overdraft to your new graduate account, then the account with your old bank will be closed.

What happens if my student account has automatically changed to a graduate account?

If you’ve graduated in the past three years, you can still switch your graduate account, even if your existing bank has automatically switched your account from a student to a graduate account.  
If you’re thinking of sticking with your current bank, it’s important to ask if your overdraft limit will be reduced and when you’ll start being charged interest on the overdraft. 

What perks can I get with a graduate account? 

Graduate accounts often come with exclusive deals for up to three years after you’ve graduated. The perks you get will vary from provider to provider, but can include things like: 

Note that some providers may look to offer perks, but you may have to pay a monthly fee to access these benefits, so be sure to check the terms and conditions. 

Do I have to open a graduate account?

No, you don’t have to open a graduate bank account once you’ve graduated. If you decide you don’t need the benefits of an overdraft facility, there might be other advantages included in a standard current account that suit your needs better.

Do I need a graduate account?

If you’ve built up an overdraft while studying, then yes, a graduate account could give you a little more breathing space to pay off what you owe without the added interest.  

If you don’t need to borrow any money and you’re in credit, you might want to focus more on a graduate account that pays you interest or one that offers useful perks like cashback rewards. By shopping around, you can compare the different features of each bank account, then choose one that’s best suited to your needs. 

How easy is it to switch accounts?

Thanks to the Current Account Switch guarantee, it’s quick and easy to switch bank accounts. When you open a new account, you’ll need to tell your new bank that you want to switch. Then all you need to do is fill in a Current Account Switch Agreement and an account closure form - your new bank will handle the rest of it for you. It takes just seven working days to switch as part of the switch guarantee.

What else should I think about when switching graduate accounts?

There’s a few things to think about when switching graduate accounts. Here are our top tips for finding the right deal for you: 

  • Shop around – when it comes to banking, loyalty rarely pays off. If there’s a better deal out there, go for it.  
  • If you’re in the red, you might want to consider a bank that offers the longest 0% overdraft period – this gives you more time to pay off what you owe without added interest. 
  • If you’re good at budgeting and can stay in credit, choose an account that pays a decent interest rate on your balance. You might find you’re better off with a high interest current account, rather than a graduate account.  
  • Consider what freebies are on offer and if they’ll be useful to you. Just make sure the account works well for you and enticing perks don’t cloud your judgement. 
  • Remember that some graduate accounts decrease your overdraft limit over time, so make sure you budget enough to clear your debt as quickly as possible.  
  • Talking of budgets – never go over your overdraft limit. You might have to pay fees for any transactions you make and any refused payments, and it can damage your credit rating too. Exceeding your overdraft limit might also mean your 0% interest free period is taken away. In short: if you haven’t got it, don’t spend it.  

Last, but by no means least, check your credit rating before you apply for a new bank account. Have you noticed that banks usually advertise their overdraft limits “up to” a certain amount? That maximum amount is typically reserved for those with the best credit ratings. If your credit history isn’t that great, you might not qualify for a higher overdraft limit.  

You can check your credit file for free with one of the three main credit reference agencies: Experian, Equifax or TransUnion.  

In the meantime, try to improve your credit score by paying your bills on time and not maxing out your credit card.  

Did you know? 
Most young borrowers don’t realise that registering to vote can affect their credit score. A recent Compare the Market study revealed that 72% of 16-24 year olds don’t know that being on the electoral register can improve their credit rating. This is because banks use the electoral roll to verify who you are and where you live. If you’re not on the electoral register, it could harm your credit score and scupper your chances of applying for credit in the future.  

Comparing graduate accounts

Being loyal to your current bank doesn’t always work in your favour, so make sure you shop around for competitive overdraft deals to find one that suits your needs. Using our comparison tool, you can compare and check out the graduate bank accounts we have on offer.

Frequently asked questions

Can I still switch bank accounts if I’m overdrawn?

Yes, you can take your overdraft with you when you switch bank accounts, but you’ll still need to pay back the debt. Just be careful though. If your new bank doesn’t offer the same overdraft limit, you might not be able to make the switch. Ask your bank what your options are. Some might want you to pay back the full amount within a few days of closing your account.

What happens if I go over my 0% overdraft limit?

This is something you should try to avoid. Some banks will send you a warning if you’re about to go over your overdraft limit. While this can help you avoid transaction charges, it could also harm your credit score.  

If you really need to borrow more money, talk to your bank. They might be willing to increase your overdraft limit, although you’ll probably be charged interest. The important thing is that it’s an arranged overdraft that your bank has agreed to.  

What happens at the end of my graduate account deal?

When your graduate deal ends, you’ll most likely be switched to your bank’s standard current account. They should contact you a few months before the end of the deal to let you know. In most cases they’ll move you to one of their fee-free accounts. Just make sure you read the terms and conditions so you know what the changes will be.

What if I’m still overdrawn at the end of my graduate account deal?

Once your 0% interest graduate deal ends, you’ll be charged interest and fees on top of your existing debt. This could mount up pretty quickly.  

You might want to consider switching to a bank that offers a cheaper or free overdraft on their standard account. Just check that they’ll allow you to switch accounts if you’re in your overdraft before you apply.  

Another option is to move your overdraft debt to a 0% money transfer credit card. You can use the 0% interest free period to reduce or pay off your overdraft without added interest. Make sure you clear the outstanding balance before the 0% period ends, or you’ll be stung with high interest fees after that.  

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