In-credit Student

nexx_2

Hi,

Im starting university this year and am just looking to clear a few things up.

Unlike most students i probably won't be in debt through my time at university. Ive read the article on here that says even so i should still use my overdraft facility and just put my money in a savings account for 2 years. Have i understood this right? So instead of putting money into my current account i should just let it get overdrawn?

And lastly, this is my first time with a credit and debit card so im still a little unsure on a few things. To go overdrawn i need no money in my current account and then use my debit card to pay for things right?

If this is right im having a hard time working out why i would need a credit card. I havent activated it yet and was wondering if there was any reason to do so?

Thanks for your help.

indiechickuk

Hi,
it's great that you're not expecting to go into debt, you're in a very fortunate position! I did take out the student loan, as I had to, but I've just finished 3 years without using my overdraft at all, so it's completely possible (even living in London!)
The idea behind putting your overdraft into a savings account (or ISA) is that student accounts usually allow you quite a large interest free overdraft, and so by moving it into a savings account it can actually make you some extra money back. I didn't do it, but I sort of wish I had now!
Being overdrawn is exactly what you described - spending more than you have in your current account. However, you only get penalised for this if you exceed your interest-free overdraft limit, which is usually over £1000 for most student accounts. What might be worth doing is having two current accounts, one regular current account which you keep money in, and have a debit card for and can use to pay for stuff, and one which is a student account with an interest free overdraft limit that you can transfer to savings but then not use the account at all. That way you keep the two things separate and avoid accidentally exceeding your limit.

As for a credit card, it's worth having one if you want to make any big purchases (e.g. hi-fi, PC etc...) as many of them offer purchase insurance on expensive items. Apart from that, there isn't much point if your current account is in credit. I've had one for four years and only used it about twice.

I hope that all makes sense, sorry it's a bit of a long reply!!!

All the best for uni. :beer:

nexx_2

Hi, thanks for your reply it really helped clear things up for me.

melancholly

i think the only upside to a student credit card is that if you can use it and pay it back in full each month (which you'd need to - student APRs tend to be nearly 20%!) you can start to build up a good credit rating..... but if there's any chance that you might get into trouble with it, don't bother. I use mine mainly for online purchases, so that if anything goes wrong i'm really well protected.

nexx_2

I just tried to use my debit card (that i recieved today) online and it got declined even though i should have a £1000 overdraft. Am i doing something wrong? Am i meant to wait till i recieve my pin or other letters (as none of the letters that came with the debit card mentioned anything about my overdraft, or it being a student account) or do i need to contact them?

Ill probably end up phoning them tomorrow anyway but if anyone could help id appreciate it, thanks.

Oh and thanks for the credit card info too, i guess building up a good credit rating would be useful.

indiechickuk

if you've not received your pin yet then it probably just means that the card's not activated yet.
Which bank did you open the account with?

lillydrip

If you are planning on putting your overdraft into an ISA or savings account, I would recommend paying a little bit of money into your current account (that you took the overdraft from) by direct debit each month, that way you avoid getting sent the nasty letters from the bank telling you off for being overdrawn and threatening to close the account.

nexx_2

The card is activate as the letter it came with said it came activated unlike the credit card that i had to activate.

I spoke to someone using their webchat as i got home too late to get to the branch and they made it sound like i dont have an overdraft and have to go in store to arange one. I checked out the letter they gave me when i signed up and it says "**Credit facilities may be obtained upon application" so im guessing thats right.

Also how much should i set up for direct debit or is any ammount ok as long as it looks like its getting used?

nexx_2

Ok looks like i didnt have overdraft on my account but hsbc were very helpful about it. I used their web chat service and they confirmed i had no overdraft and told me to go into my branch to add one. So i did and in less than 5 mins they added it to my account and its working.

Skint_Student_7

First of all this is the first time I've visited this site, so apologies if I should have posted this as a 'new thread', but I think our questions are closely related. I am also intending to open a savings/ISA account with the amount of free overdraft that I receive - Can I open a savings/ISA account with a bank that I have no current account with? I would think having the overdraft and the savings/ISA with the same bank would not be allowed? Also, do you just withdraw the overdraft amount in one full go and put it into the savings/ISA?

indiechickuk

you can have both accounts with one bank if you like, there's no reason not to, although you might as well find the best deal for your ISA. You may have a withdrawal limit on your current account, so you may have to do it in a couple of installments.
And, as previously said, if you do take out all your overdraft to put into an ISA, you can't then use the current account for anything else without putting more money in, or you would exceed your limit.
Make sense?