Repaying Halifax £3000 Student current account

nurse_british

Hi all
I graduated 4 weeks ago, although i dont start working until sep 2010, and i just wanted a little advice regarding my £3,000 overdraft with a halifax student current acc and the c/c as Halifax are non to helpful.

My ideas were to either:
1) pay £50 into account until july 2011(this is when the 0% period ends) and then be paying there interest of between £1 and £2 per day until the debts clear
2) pay £50 into the account until july 2011 and then swap to a graduate account with another bank
3) Get a loan to pay off the £3,000 overdraft and the £1500 halifax credit card(currently paying £70pcm) that came with the account

Ive also arranged for my wages to be paid into my savings acc and do a standing order for a set amount into my student account so i can keep a track on the o/d.

Id appreciate any suggestions anyone gives but im a real stress head and this debt is freaking me out as i wont be earning huge amounts.

opinions4u

Ok, first of all take a step back and stop stressing. You're not the only student to graduate with debt so you're not on your own here. It's good that you want to manage the situation.

You have a 0% facility until July next year. This gives you a little bit of breathing space and time to consider things.

Let's go through the options you've identified and try to exapnd them a little.

1) Halifax will want to see money going through the account. Probably £250 a month or more. I would suggest that you transfer £250 in to the account each month without fail to ensure that you retain your overdraft facility. Then transfer it out - all £250 of it - in to a savings account such as Web Saver Extra (£50 a month, more if you can) and £200 back in to your usual "spending" account. Just before your 0% expires, close the Web Saver Extra and transfer the funds - which will now include some interest - to the current account. This will get your debt down below £2,500 and ensure that the charges from July 2011 are £1 a day, not £2 a day.

2) Will other banks allow you a graduate account in 12 months time? If so, and assuming the terms are favourable, then go for it. Make sure you are continuing to manage the debt down though.

3) I suspect a loan will be more expensive than £1 a day on a £2,400 overdraft and their student credit card. You can compare rates, but I'd be surprised if you could raise a loan cheaply. As your debt reduces, the £1 a day charges become more significant. There will come a time when it will become cost effective to switch from overdraft to loan. We're not there yet though.

Have you considered opening a separate Halifax Reward account for your wage? If you can pay £1,000 a month through the account each month, this will earn you an extra £60 over a year. You could use this fiver to pay down your credit card debt a little faster. If you aren't going to earn £1k a month, simply move money in to your student account and then back to your reward account until the monthly credits to the new account add up to £1k. Don't, however, increase your debts by going overdrawn a a new current account.

Finally do you have any other options to top up your wage? Bar job on a Saturday night? McDonalds for one night a week when you're not doing your proper job? Or even earning small amounts through doing surveys online? If you could allocate any additional income to paying off debt (credit card first at the moment) that would be a good thing.

Perhaps posting on the Debt-free Wannabe part of the forum could help you identify other ideas to make your meagre money stretch a little further!

Being really cheeky, is a one off grant from the Bank of Mum and Dad an option that could help you really help you start life with a clean slate?

Good luck.

Halifax are non to helpful.

It may be worth expanding on this statement. In what way were they unhelpful? It may be that your expectations of a branch sales force are different to what their job actually is. This might be a key lesson for life!

Kavanne

In your new job can you really only afford to pay £50pm??? You should write down your income vs. expenses and see what you can REALLY afford which I expect will be much more.

onlypaddy

Option 2....but try to pay more if you can

If you are worried about getting a graduate account in 12 months, try and get one now maybe? Then you can transfer your overdraft at the end of the 12 months

nurse_british

Thanks for all your replies its given me food for thought, ive noticed their were some questions in replies so ill answer them below:
1)Firstly i thought by paying £50 pcm on my overdraft i could increase my c/c payments to £200 pcm as this isnt interest free
2)im moving from a rental in the North that cost £300pcm to a rental down south costing double that plus council tax and household bills, so i dont want to pay more than i can afford and end up with more debt/bad credit.
3)my mum is starting university in sep 2010 so both parents will need their own money(very happy for her but i could do with interest free loan from them now :-)
4) i could get a graduate acc up to 3yrs after finishing university. Problem is none of their initial interest free over draft is the same as mine so i could get £2,000 interest free then pay interest on the £1,000
5) In regards to Halifax my biggest bug bear is they changed the terms and conditions of the student acc, between when i opened the acc and now. I havent recieved a letter or e-mail and as my address hasnt changed in over 7yrs i assume they havent sent anything out to me. I have been into Branch and asked what alternatives are available and i was advised to get my wages paid into another acc and then s/o money back to my student account. Ill go into branch and ask about the current acc mentioned.

finally i know on the grand scheme of things my debt is small but in the profession ive gone into chances are ill have to go back to university again to progress on Agenda for change pay scheme, and then i dont want old debt.

opinions4u

nurse_british wrote: »

1)Firstly i thought by paying £50 pcm on my overdraft i could increase my c/c payments to £200 pcm as this isnt interest free

That does make a lot of sense. The key for me is making sure that your current account debt is below £2,500 in July next year - to half the charge.

4) i could get a graduate acc up to 3yrs after finishing university. Problem is none of their initial interest free over draft is the same as mine so i could get £2,000 interest free then pay interest on the £1,000

Could you open one now, move £2,000 of overdraft over to it and reduce the balance on the Halifax account over the next 12 months?

5) In regards to Halifax my biggest bug bear is they changed the terms and conditions of the student acc, between when i opened the acc and now. I havent recieved a letter or e-mail and as my address hasnt changed in over 7yrs i assume they havent sent anything out to me.

I'm not sure that they have changed the T&Cs on the current account (beyond statutory legislation relating to payment services etc). They have change the terms and conditions of their non-student current accounts - but they wouldn't need to write to you to tell you this until nearer the end of the life of your student account.

Good luck sorting it.

As far as I can see you could:

- move £2k of debt over to the graduate account
- get rid of the credit card debt over the next few months
- get rid of the remaining £1k balance on the student overdraft with Halifax.

This will then leave you with £2k of debt to repay on the Graduate account.

Doable?

nurse_british

opinions4u wrote: »

That does make a lot of sense. The key for me is making sure that your current account debt is below £2,500 in July next year - to half the charge.

Could you open one now, move £2,000 of overdraft over to it and reduce the balance on the Halifax account over the next 12 months?

I'm not sure that they have changed the T&Cs on the current account (beyond statutory legislation relating to payment services etc). They have change the terms and conditions of their non-student current accounts - but they wouldn't need to write to you to tell you this until nearer the end of the life of your student account.

Good luck sorting it.

As far as I can see you could:

- move £2k of debt over to the graduate account
- get rid of the credit card debt over the next few months
- get rid of the remaining £1k balance on the student overdraft with Halifax.

This will then leave you with £2k of debt to repay on the Graduate account.

Doable?

Thanks for your reply.
I have found with the graduate accounts that you have to transfer your whole Student acc balance, so i will try and get my current balance below £2500 atleast until my 0% interest rate ends.
But i defo think the c/c needs to be reduced 1st as i know that can spiral quite qucikly.
I do appreciate your input though thanks once again

JacksterD

I'd say the best thing to do would be open an RBS, Natwest or Lloyds TSB Graduate Account, because each of these lasts 3 years.

daniel598

On a student current account you need to be paying in at least 400 a month for the Halifax to continue with the overdraft. It might not be picked up on for a while but if less then 400 a month goes in they will usually send a letter from retail collections to repay the overdraft.

Kavanne

RBS/Natwest is only 2 yrs now

opinions4u

daniel598 wrote: »

On a student current account you need to be paying in at least 400 a month for the Halifax to continue with the overdraft. It might not be picked up on for a while but if less then 400 a month goes in they will usually send a letter from retail collections to repay the overdraft.

Isn't that £400 a term?