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Overdraft debt

Graduate overdrafts - what you need to know


What will happen to my overdraft when I leave university?

Once your university course is finished, normally your bank will convert your student account automatically into a graduate account. Your new graduate account will typically come with an overdraft fixed at 0% interest for at least two years. However, your 0% overdraft limit will decrease progressively every 12 months, to encourage you to pay off your debt.

You don’t need to stay with the same bank or lender once you’ve finished your course. You may be able to get a better account with another provider, for example one that offers a longer interest-free overdraft, or one that comes with free gifts or other incentives.

You may be able to switch even if you have a large overdraft debt outstanding, though of course this is at the discretion of your new provider.

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How deal I with graduate overdraft debt?

Once you’ve decided whether to stick with your current bank or switch to another, it’s time to think about how you can pay off your overdraft debt. You should gather the following figures and information:

  • How much overdraft debt you have outstanding
  • How long your bank will let you borrow at 0%
  • When the limit on this 0% borrowing will be reduced, and to how much

Once you’ve done this, you then need to set yourself a repayment target. By doing this, you can keep all your overdraft borrowing within the 0% limit for as long as it’s in place.

You’ll still need a detailed plan for how you’re going to reduce your debt. The best way to do this is by making a budget, which we can help you with.

Once your budget is complete, you’ll be able to clearly see the difference between your income and your outgoings. You’ll be able to spot ways to save money, and begin to reduce your overdraft usage.

Should I ask for my own overdraft limit to be reduced?

It can be difficult to stay within your overdraft limit. As you begin to reduce the amount of your overdraft usage, consider asking your bank to reduce your limit as you need it less and less. This can stop you from being tempted to borrow too much.

Should I ask for my own overdraft limit to be reduced?

It can be difficult to stay within your overdraft limit. As you begin to reduce the amount of your overdraft usage, consider asking your bank to reduce your limit as you need it less and less. This can stop you from being tempted to borrow too much.

I’ve heard that overdraft rules have changed in April 2020. What does this mean for my graduate overdraft?

In April 2020, all overdraft providers are switching to a flat rate of interest for their standard current accounts – mostly around 40%.


If you have a graduate account, or if you’re graduating this year, it’s well worth asking your bank whether the 0% interest limit of your overdraft will be reduced, or even removed entirely.

What if I’m struggling to manage my overdraft?

If you’re really struggling with your debts after leaving university, you should seek free, expert advice. We can help you take control of your financial situation.

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