Student accounts... how to make the most of an overdraft?

sprizzle

Hi!

I started at uni a couple of years ago and opened a student account with natwest. I made full use of the overdraft, & credit card which ended up being a bad decision because when I ran out of money and had to leave after a few months, I was left with a bit to pay back. (You have to pay your tuition fees straight away if you quit!)

I now work full time but I have still got a student account (i would be in my 3rd year if i had stayed). I have not yet managed to pay back the overdraft (i thought it was more sensible to pay back the things that were charging interest first). I am "entitled" to an overdraft limit of £1600 at the moment but my limit is at £1400, and I tend to be towards that limit at the end of the month.

now i am thinking of going back to uni in september for 2 years so I have decided to painstakingly save as much as I can til sept to save for living costs so I dont get in such a mess as last time, so I popped in to natwest today to discuss my account. They said that because I would technically be a year one student again, I'd only be entitled to a £500 overdraft for the first term, so once I change it, and if I am over the £500 limit, (which will be likely) I will be charged interest.

Would it make sense to open another student account at a bank with a bigger overdraft limit, use this free overdraft to pay off the natwest overdraft which i will be being charged for, then change the natwest account to a current account to be used whenever?

I am going to slowly reduce my current overdraft limit over the next few months to make things a bit easier, but i dont think I will get it down to the £500 mark quick enough if the majority of my earnings will be going towards saving for living costs for uni!

Please let me know your thoughts, I just want to make the most of the best student accounts and not have to pay interest on the natwest account I have at the moment. Thanks in advance for any advice!

olly300

As you were in a mess before and haven't been able to pay the money off that really isn't a wise decision. To play around with credit one of MSE's gold rules is not to be in debt in the first place.

In addition you need to avoid the RBS group of banks if you go down this route.

timnicebutdim_2

Been down that road and it isn't a good idea!! Keep plugging away at the overdraft and get yourself out of debt and then never use your overdraft again. The interest will be negligible and you wont regret it, i promise

sprizzle

ok thanks for the feedback guys, I'm hoping to start a much cheaper course this year and hopefully will be much wiser with my money as a mature student than I was in my teens! lol

also, what is it about the RBS banks that I would need to avoid? would you recommend banks that arent part of the RBS? judging by the customer service at natwest today and stories from other customers€ amongst other reasons, i am dubious about staying with them.

Stubert

Your account with Natwest is still a student account but you've not been at uni for 2 years? Yet its still classed as that as you have £1600 overdraft. Is it a student account or a regular account?

Surely you just don't tell them that you are going back to uni, and you would still have the £1600 limit rather than being reduced to £500? You could get your student loan paid into it, but it doesn't necessarily have to be a student account that its paid into.

Its in most banks T&C's that you can't have more than one student account, so if you told them you were a student to reduce it to £500 you might not be able to open another and get the overdraft from that one to pay it off.

Unless I'm missing something, surely you just don't tell them and they won't reduce it? As they know you're not a student at the moment and haven't taken the overdraft facility away from you!

sprizzle

Yeah its still a student account. I left it that way because I wasnt sure if I was going to go back to uni. I went there today to ask an advisor how to reduce the limit on my overdraft to slowly pay it back, so she asked about which year I was in, so i said I would be starting again in september, but she said that because I initally told them I was doing a 3 year course, that they might automatically change it at the end of the year because they will think i have graduated? its all very confusing, so i wasnt sure if they would take the whole overdraft off me if they thought I wasnt a student at the moment... but no one at the bank seems to know what the process is, its all very confusing!

do you reckon I should just carry on as I am with my current student account? I just dont want to get to a point where they ask me why im still at uni and then drastically reduce the overdraft once they know that im back in first year!

The_One_Who

Yes, student bank accounts usually automatically revert to either a graduate account or a regular account. You will need to tell them that you are still a student, although tbh, I don't think you should have had a student account for the previous couple of years.

olly300

sprizzle wrote: »

also, what is it about the RBS banks that I would need to avoid? would you recommend banks that arent part of the RBS? judging by the customer service at natwest today and stories from other customers€ amongst other reasons, i am dubious about staying with them.

If you are going to be a student one thing that will help you is learning how to do research yourself now. So go to google and put in the appropriate search terms to find out what banks are part of the RBS banking group.