At present, these of their second yr after graduating get a most interest-free overdraft of £2,000 on the 123 graduate account – however that is falling to £1,000 for these beginning their second yr after 1 July.
The change signifies that should you’re in your overdraft by greater than £1,000 after your first yr of getting the graduate account, you will be hit with curiosity fees of 39.94%. For instance, should you begin your second yr with the graduate account owing £1,500 – which may nicely occur given Santander affords many college students a £1,500+ restrict – you will now pay round £14 a month in curiosity.
As well as, from 12 April, these with each the 123 scholar and 123 graduate accounts will now not earn 1% curiosity on in-credit balances of as much as £2,000, as that is being axed.
There may be, nevertheless, no change to how the overdraft works on the 123 scholar account – your total overdraft will stay interest-free. There may be additionally no change to graduate overdrafts in yr one, as these will stay at as much as £2,000 interest-free, whereas in your third yr after graduating you will be rolled onto a daily Santander account with totally different overdraft fees (usually no interest-free buffer and 39.94% curiosity) – as is the case now.
How can I beat the fees?
Here is what you may contemplate to get across the new charges:
- If you wish to preserve the account, attempt to cut back your money owed. Those that might be hit are those that come into their second yr of getting the graduate account owing greater than £1,000. For those who can, attempt to cut back the quantity you owe so that you fall throughout the new £1,000 0% buffer earlier than the top of your first yr on the graduate account. See our Free Budget Planner and Money Makeover guides for assist.
- Think about switching. Alternatively, you might attempt switching to a financial institution providing graduates an even bigger or longer 0% overdraft. Barclays, HSBC, and TSB, for instance, all supply £2,000 interest-free overdrafts in yr two – and crucially, you needn’t have had their scholar accounts to use – see our Graduate Accounts information for full data. Simply keep in mind that it is as much as the brand new financial institution to determine whether or not to give you an overdraft and there aren’t any ensures.