Clearing your student overdraft debt

First you need to find out how long you can keep your 0% interest overdraft for. Depending on which student account you opted for you should have some time left after you graduate, generally tapering off over the two years after your degree ends until you are automatically transferred into a graduate account. It’s also a good idea to figure out how much of your overdraft you’ve used or plan to use before final year ends.

This should be your first option, because it just requires some of your basic money and debt management skills that you’ve hopefully finessed over your time as a student - budgeting. This is especially easy if you’ve managed to land yourself a graduate job and you’re going to start earning right away.

Figure out how long you have to finish paying off your interest-free overdraft according to the terms of your graduate account, then divide the amount you have to pay off over this time. From here you know the minimum amount you must pay monthly and you can either set up a direct debit if your wages go into a separate account, or ensure you note down the amount in your graduate account that you cannot spend. By spreading it over the maximum time like this hopefully it won’t cut too much out of your paycheck!

Similarly, if you have money in a separate savings account you can drip feed it into your overdraft repayment, rather than part with the lump sum all at once - just make sure you account for unforeseen financial trouble in the future before you blow the remaining savings on a big graduate holiday - you don’t want to come up short before your 0% interest ends.

Remember, you don’t necessarily have to stay with your current bank for your graduate account. Although this is sometimes the best option, make sure you’ve shopped around to make sure you’re getting the best offer. It’s important to check with other banks if you can transfer to a graduate account with them. If so, you could be giving yourself one or even two more years to spread out paying back your overdraft, interest free.

Whichever way you decide to manage your student overdraft repayment, the most important thing you can do is to have a clear plan of action to make sure you don’t get yourself into more debt than you started with.