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Graduates urged to take steps to tackle debts

Graduates urged to take steps to tackle debts

Category: Banking

Updated: 21/07/2011
First Published: 21/07/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Graduates about to conclude their university studies have been urged to tackle their debts head on.

As the academic year draws to a close, Moneyfacts.co.uk has warned that the transition of moving from full time study to full time employment can be a difficult period.

Michelle Slade, spokesperson for Moneyfacts.co.uk, said many graduates are finishing their studies with five figure debts, making it essential they get their priorities right when it comes to sorting out their finances going forward.

Ms Slade suggests finding the best graduate account should be one of the first steps to be taken to help save money.

"Many graduates will inevitably remain loyal to their student account provider, but there is no reason why they can't switch to get a better deal," she adds.

"The interest free overdraft of a graduate account is the most important element.

"By finding an account offering as much of an interest free overdraft as possible, graduates can ensure they don't pay more interest than they need to.

"Most graduates will have more debt than the interest free limit, so finding an account charging a competitive rate on any additional borrowing is vital."

The Barclays Bank Graduate Additions account is highlighted as being worthy of consideration.

The account has a fee of £7 per month, but offers an additional £1,000 interest-free overdraft in the first year.

Ms Slade also points out that many accounts offer incentives in order to tempt people in, but warns any offers should be seen as a bonus rather than being the reason for selecting the account.

Further advice includes paying off those debts which charge the highest rates of interest first.

"Credit card debt is typically the most expensive and should be repaid first, while the interest payable on a student loan is much lower," she explains.

"Graduates shouldn't bury their heads in the sand over their debt.

"By working out exactly how much they owe, they can set themselves a monthly budget and decide how much they can afford to repay."

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