Having more than one a/c against the law?

greyster

ejones999, thanks for replying.

As far as I the customer is aware, I'm signing and accepting a credit search when I apply for an account. This credit search lowers my credit score because someone is querying my credit. The initial credit search is also mentioned in the T&Cs.

You mentioned additionally credit searches, I doubt this. For this to happen, the customer would have to agree to it. Perhaps if it was a significant overdraft increase or a loan, it would warrant a credit search and therefore the customer being invited in. However the student overdraft facility in most banks only increases £250-£500 each year, half of them do it automatically.

I'm glad the word fraud doesn't enter the discussion. Yes it can be classed as beating the system because certain banks "ask" customers only to bank with them. It is fair enough - seeing as they are businesses wanting our money. I walked into three banks yesterday who said they didn't mind but obviously would prefer if I did all their major banking with them.

fragster

personaly i still have 3 student accounts all with over a grand interest free OD, HSBC have just increased my overdraft for this year too and my RBOS and natwest accounts OD has stayed the same as per their T&C, but none of them have said anything about closing accounts or paying back overdraft, i use them all a bit for this and that but hsbc is my main account.

jonesMUFCforever

Greyster
Thank you for replying.I can advise you that the terms and conditions of your account will have something like 'we will share information with credit reference agencies before determining credit facilities' or such like and if your bank relies on a credit scoring system (unlike a bank where a clerk or account manager has personal discretion to lend) then an automatic search is done by the system. Your original signature on the application form would give the bank authority to do this.
Anything untoward on your credit file may make your bank unwilling to renew or lend further to you.
What everyone should note is that overdrafts are repayable on demand, so if you have loads of accounts all with overdrafts non payment will destroy your credit rating for some time.

ohit

Firstly, most of the high street banks don't actually put information on credit file's about current accounts, let alone the overdraft limit. There's posts out there from many people confirming this (had x account for years but not listed in any credit files etc.).

Even if there was other overdrafts showing up, what's to say it isn't a "normal" overdraft at some stupid interest rate, as opposed to a student 0% one?

I doubt also if a CIFAS warning is an issue anyway. If the bank had a problem about an account application they'd query it with you first. If you feel it's gonna cause problems just say you no longer want the account and stay away from the bank.
The real chances are that the bank will want your custom as they expect the young account holders to keep their accounts for years and years with lots of income when you start real work. They will not want to lose your application.

You could avoid mutliple searches in a short period of time in later years by simply not asking for the increase in overdraft that the bank may advertise (later years of the course).

In fact, I had 3 of the children/youth type accounts from before and converting them to student types was as easy as showing them the UCAS letter (photocopies, of course). No signature or anything about a new terms & conditions was asked for. No search appeared on my credit file. If they have no signature for credit seaches, how can they, legally?

A lot of people (including myself), simply want multiple 0% overdraft accounts because they can, and only can now that they're a student. It means quite a bit of "free" interest if properly placed in high interest savings accounts.

This also means that if a bank does demand the overdraft back, one can easily repay it back - Just withdraw from savings. Banks won't just instantly start charging you interest on it without enough notice or warning.

Credit _searches_ only stay on ones file for 12 months. After that they clear. Therefore if you're student for 3-4 years, does it matter? Once you finish being a student you could basically close the accounts, which is seen as a good thing for credit scores (a/c would be "settled").

Do remember that banks have thousands/millions of accounts to deal with. Simply keep activity on them all and the little computer program they might have to filter out non-active accounts won't start ringing alarm bells.

For example, an easy plan (or, my plan, if you like) is to simply get my income sources to be filtered in bits to each of the accounts. I understand this may not be possible for everyone, but it's been know to do BACS transfers in circles or use each account for different things (one for rent, one for ATM cash, one for debit card purchases, etc. etc.)

It isn't illegal in terms of a crimical offence just probably against the terms of the account. It's easily do-able for about 3 or 4 accounts. The full 7 or 8 that are out there might need a bit more though.

Another idea that's just crossed my mind is... why not apply for each of the different banks in one month intervals once you've actually started the course. You could basically argue (if they ask/care) that you're not happy with the current service you're received and what to try something else.

Just go for it guys, seriously.

jonesMUFCforever

Hello Ohit
Which banks did you convert your youth a/c from to Student ones?

Spin_3

Hi, I thought I share with you my experiences.

I'm a student just going into my 3rd year. Before I became a student I had an account with HSBC.

Upon going to uni, I upgraded this account to a student account with £1000 OD. In the middle of my first year I got clued up about my finances and I realised LloydsTSB did £1500 OD for first year students (they dont it anymore) so I grabbed that. No problems getting that.

At the start of my second year, I opened my third student account with Natwest who gave me £1400 OD. LloydsTSB OD stayed the same whilst HSBC automatically went up to £1250.

Now I'm going into my third year, HSBC automatically raised my OD to £1500, LloydsTSB stayed the same, and Natwest should raise my OD to £1600 soon (might have to chase them up). I've just been accepted for a Smile student account

I noticed that none of these accounts appear on my credit file which probably helps.


Tips for opening more than one student account
===================================
1. Never go to a student branch if you can help it. They can be more clued up here. Just go to your high street bank, and get someone to help. They're not so used to setting up student accounts and generally less suspicious.

2. Have a non-student bank account that you use rarely. (Its important to use it occasionally so something appears on your statement!) When the student bank asks for statements from your current bank give them the statement from your non-student bank account.

3. There may be a "killer" question on your application asking about other forms of credit you may have. Answer wisely. Usually there is only space for 3 things, so having three credit cards means you dont fill in your commitments to other student accounts. (Though i dont think all the banks ask for this). Alternatively if you open all the accounts at the same time, technically you dont have any credit yet so you wouldnt be lying.

If you do put anything related to another student bank account (or another overdraft) on your application form, your chances of success will go down. So avoid at all costs.

4. Spend £2 to Experian and £2 to Equifax to get your credit file before applying for multiple accounts. See what the banks see when you apply.

5. Apply for the HSBC and Natwest accounts at the start of your first year. You CANNOT get the free cash/railcard if you open your account later in your student life unfortunately.

6. Some of the banks will expect your student loan into the account. Two options here, either put into one account and bank transfer it around all your student accounts. Alternatively tell them you dont have a student loan and that you will make regular payments into the account. Then set up a standing order to pay £10 into all of your student accounts every month. This will keep your student account from been flagged as inactive, which will incur a letter from your bank asking why your account has been inactive.

7. If you open your account at a later date you need a letter from your registration office at your uni stating that you are a student on a particular course for a particular duration. Your UCAS letter probably wont do.

8. Internet banking is your friend.

9. But I would do as much as possible in person rather online in regards to applications.

10. If you can control your spending, get a credit card. Spend very little on it but spend every month, and pay it off. This will help increase your credit rating which helps you at a later date.

If you cant control your spending dont get a credit card.
But if you want a credit card DONT get the credit card that the banks offers. Its so utterly rubbish. Try elsewhere first. Egg seem to accept students. Expect a limit of about £500. If all else fails then you can always go back to your student bank account and ask for their credit card.

DONT try and get multiple credit card from different student accounts. Looks bit suspicious in my opinion as this will be on credit file.

When filling in the income section of your credit card application include everything you will get. Grants, loansa and parental contributions. Obviously you wont know exactly how much you will be getting so guess towards the higher side. Be sensible though.

11. Some of my mates had good success at opening multiple student accounts by signing up to an additional bank at a freshers fair. I personally havent done this but just thought i'd add it in here.

12. Some of the banks are part of the same group. E.g. Halifax and Bank of Scotland. Avoid opening accounts at both. They probably have more communication between themselves.


General student bank account tips
=========================
1. Dont ever go over your overdraft limit. If your going to, ring them up ask for a temporary OD extension. This will save you the charges. I know HSBC and LloydsTSB let you go over your overdraft once every 12months without charging you loads. They charge interest for this, except Natwest.

2. Dont use any of your student accounts as your main bank. Let me explain. If my balance is -£500, then goes down to -£565 its hard to appreciate the loss in money when compared to £65 goes down to £0. (This applies more so when your drunk.) On top of this if you bank elsewhere without an OD you will get interest paid cos you will be in credit. Example get a £1000 overdraft from HSBC, take it all out and put it in a normal bank account and you can earn interest on it. (This assumes your not going to invest it - see later). The best normal current account if you can get it, is with intelligent finance. Open a direct savings account with them at the same time and you will get 4.75% interest with no monthly income requirements. Thats a good deal. (Note although Smile advertise vaguely good credit rate, its useless if you gonna exploit the free overdraft cos you'll never be in credit).

Put your student loan into this high interest current account and you'll makes some more money (=more pints).

Slight warning here - if you have a good credit score, the non-student account may well give you a overdraft. You PAY interest on this so dont use it.

3. If you pay in foreign cheques, LloydsTSB are the best for students cos the money appears in your account within days. Other banks tend to view students as high risk and you have to wait 4-6 weeks.



Investing
========
You'd be a a "class A" idiot if you got all this money and just splashed out and spent it all.

Two options:
===========
1. Open an cash ISA and put it in there cos when you graduate you unfortunately start paying taxes. I'd recommend Newcastle Building Society which pays 5.95%. Your money is tied in for 2 years though you can withdraw it if your desperate for cash, and the amount you withdraw wont get 90days interest. Its a fixed rate too though not sure how long this offer will be open.

Do this if you dont mind paying the interest free overdrafts to the banks back from your working salary with a year or two after you graduate. This will keep the interest of this money tax free for the rest of your life. (Note the allowance for Cash ISA is being reduced to £1000 from £3000 from 2006)

2. Open a standard savings account. Benefits include getting your money at any time, but at lower interest rate. Try Birmingham Midshire at 5.4% interest for first 12months. Remember to switch after 12 months though as interest rate goes down.


Summary
=========
This is probably one of the only times you get in your whole life to screw the banks over so if you play your cards rights you can.

YOU CAN MAKE MONEY FROM THE BANKS!

When your time as a student finishes, graduate accounts are available though I've not yet mastered those.

Good luck in your efforts.


DISCLAIMER
============
If your the type of person who spends everything they can get there hands on (like some of my mates) you really shouldnt be reading this let alone thinking about doing it. Its in your best interests to forget everything here.

I hold no responsibility whatsoever for anything you choose to do. You're capable of making your own decisions.

zcaprd7

Probably one of the best posts on the student thread and should have its own sticky thread!

Every student should read it...

Everything here is true - yet most will be too 'scarred' about opening multiple accounts (just read the title of this thread).  Obviously be a bit clever about (you are supposed to be after all).

At the end of the day the banks are offering these incentives so you remain with them for life - you will merely be trying them all out until you find the best one...

F1F1

Great post, Spin, and thanks to all the others as well.

Rich_4

Mad props to Spin for that informative post. Never thought about saying I won't be receiving a loan, but that's definitely the way to go!

At the moment, I only want to use the overdrafts for investing so the use of them isn't that crucial (like I said, i have my loan paying my student fees, parents have accomodation covered so the 4K i have saved is effectively spending money).

Once this month's credit card bill has been paid, I'll hit up all the banks on the same day, online which I'm guessing would mean the Experian check wouldn't be that crucial. Also, I've been told authorised overdrafts don't appear on credit ratings...

lee__48

I opened three student accounts in my first year at uni. I'm now starting my second year and applied for an account with Halifax. I was declined. Not sure why as I have a fairly good credit history. No bad marks - perhaps just too many searches.

I phones Lloyds TSB the other day and they increased my overdraft by £250. I also phoned NatWest, but they refused to increase the limit because I don't use the account. My excuse that I use First Direct for most of my banking and always purchase using a credit card didn't work. I did ask what I should do and she said just pay some money in regulary (I have been paying my student loan into the account but obviously this isn't good enough if you take it out again the next day). So currently in a process of moving direct debits so I use all the accounts. So I think if your gonna expliot the overdraft make some regular payments into the account so it appears active!

Lee