Student Overdrafts

AlphaBravo123

Hi,

I currently have 3 different student accounts with 3 different banks

All in all, I have £2700 worth of interest free overdraft, which gets increased every year.

I provided proof of student status before being awarded the overdrafts back in September, but as of this month I'm leaving Uni to start a full time job.

I'm currently close to being maxed out on all 3 overdrafts, so paying them back now would be a nightmare.

Unless I tell them, I don't see how they'd find out that I've quit, as I have no dealings with student finance whatsoever, and I highly doubt they ask for letters from Uni at the end of each academic year.

I was thinking that once I'm earning, I should save up the £2700 worth of overdraft and stick it in a high interest account for 3 years. Possibly even adding a little bit of my own money. In 3 years time, the banks will presume I've graduated and will probably give me another 12 months interest free to pay it all back, so I might be able to keep the interest earnt on several thousand pounds for at least 4 years.

Does anybody know why this wouldn't work?

MrsManda

It could work fine, BUT beware that:

Overdrafts can be recalled at any time, with little notice or reason - they are repayable on demand

Not all student bank accounts necessarily have a follow on year where you can continue to get the Interest free overdraft after your course has ended. You need to check your terms and conditions carefully on each account to see what the rules are and what evidence they require.

Those accounts which switch to graduate accounts may gradually reduce your overdraft as standard

Accounts may require a steady income to keep the account/overdraft active

Being in multiple overdrafts may affect your credit rating especially if one or more are recalled and you have no means to repay.

You need to check the T&Cs of each account carefully and be aware of the fact that overdrafts are repayable on demand.

GothicStirling

You mean 'if' you can get a job. Even those of us with 12 years work experience and due to graduate are struggling with than.

The previous post is correct, if you incoming money isn't covering your overdraft, your credit rating is shot.

On a legal point your are only allowed one student bank account, and you've broken that law twice.

I graduate this June with an overdraft of £1800, which my bank is offering a interest free loan to pay it off, which I intend to take. This isn't an option for you as you need to take your graduation certificate to qualify.

Nice little hole you've dug for yourself there.

AlphaBravo123

GothicStirling wrote: »

You mean 'if' you can get a job. Even those of us with 12 years work experience and due to graduate are struggling with than.

The previous post is correct, if you incoming money isn't covering your overdraft, your credit rating is shot.

On a legal point your are only allowed one student bank account, and you've broken that law twice.

I graduate this June with an overdraft of £1800, which my bank is offering a interest free loan to pay it off, which I intend to take. This isn't an option for you as you need to take your graduation certificate to qualify.

Nice little hole you've dug for yourself there.

LOL. Gotta love ignorant people who don't know what they're talking about. Oh well, every village has got one !

I already have a job in the NHS, earning £20k. I start this month. Obviously this goes up every year with increments and £250 yearly payrises for the next 2 years. They are also funding my training for future promotion via a local university.

Having more than one student account is not against the law. It is against some banks terms and conditions, but certainly not all banks. Even if it was, breaching terms and conditions is not the same as breaking the law.

I know that I can repay the overdraft....the question is, instead of putting the money back into the account, should I (whilst its interest free for several years) just pop it into a high interest savings accounts?

After my rent and bills, I'm still left with quite a bit left over at the end of the month, so I might save some of this also.

BTW...good luck getting a job after you graduate and paying off that loan....nice little hole you've dug yourself there (we can all be judgmental!).

Lokolo

A £1k overdraft will get £30 a year in interest approximately (less after tax).

However, if the bank withdraw the overdraft you will get charges which will most likely be more than the interest. So imo, not worth it.

AlphaBravo123

Lokolo wrote: »

A £1k overdraft will get £30 a year in interest approximately (less after tax).

However, if the bank withdraw the overdraft you will get charges which will most likely be more than the interest. So imo, not worth it.

So around £90 a year I wouldn't otherwise have? More in years 2 and 3 when the overdraft is automatically increased.

It might only be a few hundred quid over 3/4 years, but it's better than nothing. Look after the pennies and all that.

If the banks withdraw the overdraft then they have to write to me, and give me reasonable notice of when the withdrawal takes effect. I will then simply take the money out of the savings account and put it back into the student accounts.

GothicStirling

AlphaBravo123 wrote: »

LOL. Gotta love ignorant people who don't know what they're talking about. Oh well, every village has got one !

I already have a job in the NHS, earning £20k. I start this month. Obviously this goes up every year with increments and £250 yearly payrises for the next 2 years. They are also funding my training for future promotion via a local university.

Having more than one student account is not against the law. It is against some banks terms and conditions, but certainly not all banks. Even if it was, breaching terms and conditions is not the same as breaking the law.

I know that I can repay the overdraft....the question is, instead of putting the money back into the account, should I (whilst its interest free for several years) just pop it into a high interest savings accounts?

After my rent and bills, I'm still left with quite a bit left over at the end of the month, so I might save some of this also.

BTW...good luck getting a job after you graduate and paying off that loan....nice little hole you've dug yourself there (we can all be judgmental!).

Ignorant? I'm just finishing my degree, so I know all the ins and outs of finance law for students.

Oh, and I have a graduate job I'm walking into when I graduate [and they are financing my MA too!]

I hope for your sake, your job isn't the first one to go when the cuts bite. Last in, first out you know.

Lokolo

AlphaBravo123 wrote: »

So around £90 a year I wouldn't otherwise have? More in years 2 and 3 when the overdraft is automatically increased.

It might only be a few hundred quid over 3/4 years, but it's better than nothing. Look after the pennies and all that.

If the banks withdraw the overdraft then they have to write to me, and give me reasonable notice of when the withdrawal takes effect. I will then simply take the money out of the savings account and put it back into the student accounts.

No they don't. It can be withdrawin with immediate effect.

AlphaBravo123

Lokolo wrote: »

No they don't. It can be withdrawin with immediate effect.

The terms and conditions on all the accounts say that notice will be given, ranging from 7 days to 60 days.

First to go? I highly doubt it. I don't want to reveal my exact role, but needless to say that my job is recession proof. As it stands they are still on a recruitment drive as we speak.

Lokolo

AlphaBravo123 wrote: »

The terms and conditions on all the accounts say that notice will be given, ranging from 7 days to 60 days.

Good luck

MissPop

AlphaBravo123 wrote: »

The terms and conditions on all the accounts say that notice will be given, ranging from 7 days to 60 days.

First to go? I highly doubt it. I don't want to reveal my exact role, but needless to say that my job is recession proof. As it stands they are still on a recruitment drive as we speak.

Classic. :money: