New to the forums - Questions about Overdraft

petite_sarah17

As a new member with my first post, let me say a big hello to everybody here!:j
Im 17 (gonna be 18 in august) and will be starting uni this September and I'm exploring various student accounts. Im new to the world of finance and have a couple of questions that you could help me with.

E.g. For a HSBC typical student account if there is an authorised overdraft of £500 interest free, and I dip in for £300 from my overdraft, when would I need to pay it back? Do I pay back the £300 whenever I can or will they chase me for it?

Big thnaks from Sarah

Taiko

General rule of overdrafts is that you can be made to repay it on demand.

petite_sarah17

Taiko wrote: »

General rule of overdrafts is that you can be made to repay it on demand.

they can demand it anytime? as in instantly? what if you don't have it?.

Lokolo

petite_sarah17 wrote: »

they can demand it anytime? as in instantly? what if you don't have it?.

Debt Collectors come a knockin'!

They don't tend to do this whilst your are in education, but if you stop using the account they get worried and close the debt for someone to collect.

Other than that, the overdraft is yours for whatever you want. But if you abuse it, and don't use the account etc. they are more likely to demand immediate repayment.

petite_sarah17

Lokolo wrote: »

Debt Collectors come a knockin'!

They don't tend to do this whilst your are in education, but if you stop using the account they get worried and close the debt for someone to collect.

Other than that, the overdraft is yours for whatever you want. But if you abuse it, and don't use the account etc. they are more likely to demand immediate repayment.

So if I kept my account active and dipped into my overdraft they would let me pay it back in my own time?

Lokolo

petite_sarah17 wrote: »

So if I kept my account active and dipped into my overdraft they would let me pay it back in my own time?

90% of the time yes.

They have done it randomly for people on this forum and its been painful for them! Best bet is to try not to get in overdraft at all....

petite_sarah17

Lokolo wrote: »

90% of the time yes.

They have done it randomly for people on this forum and its been painful for them! Best bet is to try not to get in overdraft at all....

What sort of time limit do they usually give to back it back? I'm thinking if they give customers like a year to pay and its interest free wouldn't they be losing out?

[Deleted User]

the banks offer students o/d on the hope that once they have graduated and are earning you will bank with them for life
what happens is basically you pay in a third of your grant etc in october if you then spend £300 more than that you are using £300 of your o/d when your next payment goes in after xmas you will be that amount less £300 in credit,and so it goes on for 3 years.If when you graduate you are for example £1000 overdrawn then you can usually concert this to a loan and pay it off over a couple of years,or they may just reduce your o/d by 50% one year and 50% in year 2(after grad.)thus paying off the o/d

petite_sarah17

Thank u for replies everyone.

What would happen if i went over my agreed overdraft limit. E.g. If i went £1000 over my overdraft limit, and i had to pay back interest with 19.9% EAR. Will i have to back back £1199 in a years time? Is that how it works?

Lokolo

There will be charges added on top too.

So HSBC is £25 everytime you use your account when you are over your overdraft limit.

Halifax is £5 a day.

There is no time limit to pay it back, of course, until they withdraw the whole overdraft.

CLAPTON

if you went a grand over your OD limit they would probably demand you repaid the full overdraft within 30 days.

an OD is a privilege and as had already been pointed out is recallable on demand (on demand means sort of a small number of weeks)

that said with student OD as long as you fully conform to their rules (pay in your grant , use the a/c regularly, don't go over your agreed OD limit) they will often let you stay in the OD until you leave uni or even longer.

better however, to use it only occassionally as an emergency fallback and don't live in it all the time