A guide to graduate banking
As this year’s graduates will be faced with fewer employment opportunities and increased competition, Andrew Hagger of Moneynet.co.uk has taken a look at the finance options available and has provided some ‘top tips’.
• Upon commencing employment, a basic budget should be drawn up in order to gain an understanding of what is coming in and what is going out. This should provide the basis for calculating how much money can be put towards student debt repayments.
• Devise a realistic debt repayment plan, with the aim to strike a balance between repaying the debt and having a life.
• Student borrowings may be the most significant debts to have been incurred to date, however they will be among the cheapest in relation to interest rates. Therefore, the most expensive debts should be repaid first.
• If it is not possible to manage all borrowing with an interest-free overdraft facility, the interest rates for authorised graduate overdraft facilities should be investigated. By selecting the most suitable deal, money can be saved on interest charges and utilised for debt reduction.
• Graduates can sometimes find their income and expenditure to be changeable, which may occasionally mean running into the red. This can be costly and attempts should be made to avoid it by making regular bank balance checks.
• Expensive debts should always be repaid first. Therefore, once in employment and with a decent credit rating, some student debt could be moved to a 0 percent credit card.
Homeowners who are feeling the pinch as a result of their student debt commitments, combined with the current economic conditions, could consider taking out a secured loan. One of many finance options available, a secured loan for debt consolidation could be used to tie up any credit cards or personal loans that have been relied upon in the past. By consolidating these existing debts, monthly outgoings could be reduced – thus freeing up useful money each month. However, when taking out a debt consolidation loan, it must be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
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