Graduate account and first job

benbibby

Hi everyone,

I have just graduated from university and currently have an overdraft between £1000 to £2000 in a CO OP graduate account.
I will be starting work in London in September earning around £27K.

Is it best to pay off this overdraft first before considering an account which pays interest on in credit such as the 123 grad account?

Thanks for any advice.

Ben

ChopperST

Always better to clear debts before saving. However when I graduated I had a 3 year interest free period to pay off my student overdraft, is this still the case?

If it is then save the money in either a TSB current plus or Nationwide flexdirect and pay it off before the overdraft becomes interest bearing.

benbibby

My graduate account with the free overdraft lasts for 1 year I think.

So would you recommend paying my earnings into this account to pay off the overdraft and then look else where once this is done?

ChopperST

Depends on your mind set. If you have 12 months interest free then save the money in either a TSB current plus or nationwide flex direct earn interest on it and pay off your graduate overdraft before the 0% rate expires.

Some people will feel more comfortable paying the debt off little by little every month however if you are disciplined and know you won't spend your savings the first option is the smarter one.

Masomnia

Well the Cooperative took my overdraft off me with no notice and I ended up paying interest on it, so I'd be careful about doing it.

When I was a student the first time round, you could get 5% (more maybe) in an ISA, which on over a thousand pounds at 0% for three years was worth it.

Now you've got a decent job and with savings rates being poorer, I personally wouldn't bother.