Graduate accounts and overdraft

Vraja211

I have a few questions about opening a graduate account to obtain a 0% interest overdraft, amounts upto £2000.

Lloyds are offering 0% interest rates on overdrafts to graduates in the last 3 years. Now what I want to know is how does it work? How does an overdraft work? Do I have to repay monthly? or pay the sum within 1 year? etc

Also can I open two different graduate accounts and take out overdraft in both? i.e. £2000 overdraft from Lloyds TSB and £2000 overdraft on RBS graduate account?

Does getting an overdraft affect my credit rating?

Would appreciate if someone who's taken overdrafts out on graduate accounts advise me with their wisdow of how it works

Many thanks

Svenena

You don't have to repay an overdraft on any kind of regular basis. Some accounts require regular funding though (check the T & Cs). Usually with graduate accounts, the interest free element reduces annually. So eg with the Lloyds account, it's £2000 interest-free in the year after graduating, then it drops to £1500 interest free (you can still use £2000, but will be charged interest on the remaining £500, if you're using it) for the next year, and then £1000 in the third year. After that, you will be charged on the full amount. I think Lloyds actually charge £1 a day for authorised overdrafts, rather than interest, so this is what you would be paying if you went over the interest-free element.

Usually you will only be allowed one graduate account, although I'm not sure how they check this - possibly by asking whether you already have one, when you apply.

There is no such thing as a 'credit rating'. Your overdraft will appear on your credit reports - the amount you are using and the amount you have available, and other lenders may use this when calculating their own scores for products. How they view it will depend on the product you are after.

motherofstudents

I know a few graduates who have more than one account and max out the overdrafts on them. Don't know if it is 'allowed' but it doesn't seem entirely sensible as it's still a debt.

Derivative

The bank can recall the overdraft at any time and request you pay in full as far as I'm aware. So it's fine if you stick the OD in a savings account, not so fine if you use it as an actual loan.