We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Student Overdrafts---An Explanation
natweststaffmember
Posts: 12,063 Forumite
This post was originally written for "the student room" forum but I am sure it might come here so I hope you don't mind me reproducing this here in the Student Money Saving forum. It's not NatWest specific.
What is a Student Overdraft?
It is where the bank allows you to go overdrawn with their permission without incurring charges or interest. Most student Overdrafts are “interest free” for the period of your studies. You will have to pay the amount back and you will have the debt of an overdraft. However, you will not be charged interest on your overdraft while you are still studying.
What happens if I am overdrawn and my student loan goes in?
If you £250 into your overdraft and a student loan of say £1215 goes into the account then your account will be +£975(that is £1215 – 250).
When do I have to pay back the overdraft?
Once you have completed your studies, the bank may transfer the account onto a graduate account. That may involve either an interest free amount that then goes down over the following few years or may have interest to pay immediately at a preferential rate. You need to make sure you are fully aware of what your banks' terms and conditions say in relation to this. Furthermore, if you continue your studies, it is imperative you make the bank aware of this as they may be able to extend the terms of the student account prior to converting your account, which is done automatically.
The idea behind this is that when you complete your studies you will be working and therefore have less outgoings than you had while at university study. Your wages coming through on a monthly basis rather than a quarterly basis.
Can I have more than one student overdraft?
The answer is yes but remember that you are also increasing your debt while at university if you use both of them. The bank could at any point demand repayment of the overdraft as they would be within their rights to do.
What is a Student Overdraft?
It is where the bank allows you to go overdrawn with their permission without incurring charges or interest. Most student Overdrafts are “interest free” for the period of your studies. You will have to pay the amount back and you will have the debt of an overdraft. However, you will not be charged interest on your overdraft while you are still studying.
What happens if I am overdrawn and my student loan goes in?
If you £250 into your overdraft and a student loan of say £1215 goes into the account then your account will be +£975(that is £1215 – 250).
When do I have to pay back the overdraft?
Once you have completed your studies, the bank may transfer the account onto a graduate account. That may involve either an interest free amount that then goes down over the following few years or may have interest to pay immediately at a preferential rate. You need to make sure you are fully aware of what your banks' terms and conditions say in relation to this. Furthermore, if you continue your studies, it is imperative you make the bank aware of this as they may be able to extend the terms of the student account prior to converting your account, which is done automatically.
The idea behind this is that when you complete your studies you will be working and therefore have less outgoings than you had while at university study. Your wages coming through on a monthly basis rather than a quarterly basis.
Can I have more than one student overdraft?
The answer is yes but remember that you are also increasing your debt while at university if you use both of them. The bank could at any point demand repayment of the overdraft as they would be within their rights to do.
0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 353.6K Banking & Borrowing
- 254.2K Reduce Debt & Boost Income
- 455.1K Spending & Discounts
- 246.7K Work, Benefits & Business
- 603.1K Mortgages, Homes & Bills
- 178.1K Life & Family
- 260.7K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards