Small Overdraft Debts

noswad_2

Hi guys.

Im a student at Uni (don't hate me lol) entering my 3rd year which is a 'work placement year'.

I have total overdraft debts of £2,450 spread over 2 'interest free' student bank accounts (Halifax and HSBC).

I have devised a plan to pay off these debts over the coming 12 months and have therefore worked out what I need to pay back each month.

Just wondered if anyone has any words of advice, hints, tips etc before I start my work placement in July and commence payback.

Thanks for reading :beer:

brranger

make your budget realistic no need to push to hard if your not paying int you don't want to have to borrow at a higher rate if you over strech

Annie_Fanny

Hey there

Well done on forward thinking and getting your debt sorted. Have you got another year to do after this? When will the 0% period finish on your overdrafts?

As brranger said set yourself a realistic budget. Have a look at this link for all the advice you could need on budgeting written by Martin Lewis himself! http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1089226742,17582,

I also wondered if you have anything to sell on ebay or amazon etc? That could give you a much needed boost or head start on your goal of paying off your overdrafts.

OK onto the other approach....if you are brave then instead of paying off the overdraft gradually in the next 12 months (as it is 0%) you could put the money that you have targeted to pay them off into an ISA or high interest savings account so that when you could to the end of the 12 months you will have enough to pay off the overdraft and will have collected a bit of interest as well....It obviously takes discipline to do that though.

Just a thought! Good luck!

Annie

Imelda

hi noswad,
I don't have much in the way of advice just a bit of a warning. Is it against the rules for you to have 2 student bank accounts? I am going back a few years now but i opened 2 (thinking I was being clever, have one for bills one for spending) and ran up the full overdraft on both. I then had a year out working (does your bank honour the student bank account even if you are working?) and paid my wages into one of the accounts. They called me regarding this (previously the only money going in there was cash from my parents) found out I was working and had another student bank account elsewhere (I naively didn't think I was doing anything wrong by having 2 accounts) and cancelled the student status! I had to pay interest on the overdraft (fortunately my parents bailed me out with £500 and I paid them back). Just want you to check the small print as I would hate for you to be caught out like I was.

noswad_2

Hi

Yes I have 1 further year of study after my work placement and Im due to pay back my HSBC overdraft 12 months after finishing Uni, and my Halifax one approx 3 months after finishing.

When I opened both the accounts I did 'scan' through the terms and couldn't see anything concerning a work year. I think I opened my Halifax account and put that my 3rd year was a normal year. Ssshhh lol.

Am I right In thinking that If they did start to charge me, I could get an interest free account somewhere else and use that to pay off the overdrafts?

And surely if they did start to charge me, they would lower my overdraft in levels i.e. from £1200 to £800 and then to £400 every few months? Instead of saying "right you owe us £1200 and we want it NOW!!!" :eek:

Thanks for your comments.

Imelda

noswad,
Did you say that yours is a 4 year course? They usually honour the account for the full 4 years and then reduce your 0% portion of the overdraft over 3 years following graduation (HSBC was the account that didn't find out and were nice to me, RBS were the ones that did know). They didn't demand full repayment just put interest charges on it (I worked after my first year so my overdraft was only £500). I just told HSBC that I was working a gap year, they left my account as it was (at £500 0% overdraft) and then increased it to £750 for my second and then £1000 for my third year. When I graduated they upped it to £1,250 and the reduced it by £250 for the next 3 years and then it all went to normal interest charges. Just be careful you are not caught having 2 student accounts as one/ both could demand that their accounts are closed and then you will have to pay them back instantly.

noswad_2

Yes it's a 4 year course Imelda.

Thanks for the help.

What are the key factors that could enable them to discover I have 2 accounts?

What I intend to do is this:

Halifax will enable me to have a max overdraft of £1,900 (ridiculous isn't it!). Im currently at £1,200 with them now.

I will drop my HSBC debt from £1,250 to £700 (will be done by September) and then I will transfer the remaining £700 HSBC debt to my Halifax account meaning I then have 1 account. I think it's wise to be safe even though I have had 2 accs for 11 months.

Thanks again.

Imelda

Good plan noswad, better to be safe than sorry (and you're paying it back anyway). I think the only reason my bank found out was because the SLC made a payment in error (I decided to change course a term into my second year, I phoned the SLC immediately but they made the January payment anyway and then the bank got involved when the payment was returned). If the placement is part of your course and the bank knows it's a four year course then that's fine. That is a HUGE overdraft from the Halifax! Blimey I would have wracked that up no sweat. Good luck with it all, I wish I was back at uni sometimes, the less money you have the more careful you are with it....

noswad_2

"I wish I was back at uni sometimes, the less money you have the more careful you are with it...."

Couldn't agree more there mate. In my first year I went a little crazy and spent spent spent! My second year was a great learning curve in money management. Even though I only worked for 3 months, Im a lot more careful now.

Thanks and good luck to yourself.

PS. Come on England!!!!

david_hellier

Like the others say work out a budget which includes an amount for the OD and any charges against it. If you stick to the budget the balance should go down automatically over a period of time. Good luck.

noswad_2

Just thought I'd let you know that as of today I am debt free! Just in time for Xmas! Wooo :-)