An increasing amount of graduates are forced to take out personal loans because of poor financial decisions, research suggests.
Many recent graduates have no choice but to apply for a personal loan because they chose the wrong current account when they started university.
Price comparison website Moneysupermarket.com warned students to choose the best current account.
"Many students will find themselves hard-pressed financially whilst at university, with the potential to leave heavily indebted," warned Peter Gerrard, senior researcher at the website.
He said financial planning is very important even before people start university, and suggested people seriously consider their choice of current account.
Mr Gerrard warned that many high street banks use free gifts and offers to attract students, but the first priority for every student should be to find a savings account that offers an interest-free overdraft and charges no fees.
He also urged them to consider access to money from local branches and cash machines, and said: "Freebies should be the last consideration, not the first!"
Students that want to avoid having to take out a personal loan when they graduate, should steer clear from credit cards, suggested Mr Gerrard.
Because most providers are unwilling to take the risk of lending without a track record, many students have a limited choice.
"If students do want to use credit, then, other than student loans, this will often revolve around an overdraft, a credit card offered by the current account provider or expensive store cards.
"Where possible, I would suggest students utilise cheaper forms of credit, such as student loans or an interest-free overdraft, before considering a credit card," Mr Gerrard advised.
Students warned: Avoid credit cards to avoid personal loans
Students warned: Avoid credit cards to avoid personal loans
Thu, 04 Aug 2005
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