How to pay off overdraft

NoAngel

Hi all,

I am a student at the min and I have a pretty big overdraft of £1500. Once July comes around it will no longer be interest free, so ideally I'd like to start paying it back soon! The problem is it's difficult to do so whilst using the account as a current account. I tried to ask them about reducing the OD gradually over time, but apparently you can only change it once every 6 months!

I thought it may be ideal to open another account in another bank and transfer the -£1500 to there and then pay it off gradually each month till the balance reaches zero.

Does anybody have any other advice? Also, does anyone know how I could find the best bank in which to do this? (Currently with HSBC so ideally a different bank).

[Deleted User]

Nat west gives 2 years after graduation to pay off an overdraft that was created whilst a student. (they reduce the authorised amout every 6 months after graduation I think, but it could be yearly)

NoAngel

Thanks Domino! Do you know if it's actually possible to have two student accounts?

NoAngel

I looked at their website and it looks ideal! Thanks

System

Domino9 wrote: »

Nat west gives 2 years after graduation to pay off an overdraft that was created whilst a student. (they reduce the authorised amout every 6 months after graduation I think, but it could be yearly)

The interest free amount is reduced every year,

Yr 1: £2000
Yr2: £1000
Yr:3:£500

You can still have it at the higher amount but obv, you get charged interest (though its lower than other banks afaik)

NoAngel

I think that means how many years it is since you graduated. So seeing as I haven't graduated I can get up to £2000 which is more than enough for my £1500 overdraft. Then apparently you just set up a standing order and pay a set amount each month.

Seeing as my bank were really unhelpful about it and seemed to think it was odd for me to be thinking about repaying student debt I assumed it must be a ridiculous question but apparently other banks do cater for this!

Lokolo

HSBC do state in their T&Cs you are not allowed Student Accounts with any other bank if you have one with them.

Just a warning if you go to Natwest.

Also everytime you change your overdraft it will cost £25 with HSBC.

NoAngel

Hmm ok, thanks for that! I had better start reading some terms. HSBC just want to keep lending me money and like me to be in debt. Natwest seem to want to help me pay off debt! Confusing, yes, but I suppose they are businesses trying to make money after all. I can't be the only student ever that wants to be debt free!

[Deleted User]

Natwest allow you to have student accounts with other banks - but they'll not allow you to have an overdraft with another bank if they are giving you one (as a student). But you can transfer the overdraft over from your existing bank and close that account and then just use the Nat West one.

Changing your overdraft limit with NatWest up or down costs you nothing (well they've never charged me) - so you can reduce it by x amount every month until it's paid off and reducing it will remove any temptation to keep spending it.

Also, you might need to go in and check with NatWest first if they'll give you the full amount (£2000), or amount you need (£1500?) straight away - you may need to bank with them for a while first.

Sharon87

Aren't HSBC converting your account to a Graduate account? They did it automatically with me. I had a year of interest free overdraft (£1500), and now it's £1000 interest free (still £1500 OD).

NoAngel

Sharon87 wrote: »

Aren't HSBC converting your account to a Graduate account? They did it automatically with me. I had a year of interest free overdraft (£1500), and now it's £1000 interest free (still £1500 OD).

Yeah, they are giving me an interest free overdraft after I graduate, but everntually it will no longer be interest free and I really would like to start paying it off! I'm actually being paid for doing my masters so should start paying off debts before the interest piles up. And I'd like to be sorting out a mortgage at some point, so realistically reducing my debts is essential!