Paying back my Halifax Student Overdraft

loppi

Hi there!

I graduated from university last summer with a maxed out £3000 overdraft (I won't go into how that happened but I've acknowledged that naivete contributed and have learned my lesson well!). For 9 months I had no job at all and therefore no means to begin repaying it.

Thankfully I have since managed to secure a job paying 28k. I've been working here a few months now and after having put down the deposit and advance rent on a flat I have expendible income again.

I got the dreaded letter through the post last week telling me that my year of interest free overdraft will be ending on the 19th of July. I went into my local branch and explained that I'd like to discuss my options as I can't just give them 3 grand back in one go and the manager was snarky with me (apparently he's not aware of how few graduate jobs there are out there) and then gave me some premium rate number to call. This is a problem in itself as I only have a mobile phone and they'd charge me 40p per minute! I'll try calling the free number first to see if they can help me though.

I'm in the position where I can afford to pay back £200 or so a month, but my wages go into my Student Current Account so I'm hoping I won't just lose all of my wages when my overdraft is cut back!? I also have no idea how they rack up the interest (I read it's £2 a day for over £2000 @_@)... do I pay that monthly? The amount in my bank account fluctuates when I get paid etc.

I'm really not sure what happens next. I'm going to call them today but I thought I'd post here first as I know their customers interests aren't often at the forefront when they offer advice. The bank manager suggested a loan to me but I have no idea which option would be best.

Has anybody had the same experience?

Tixy

Hi

I would try calling them first and see whether they'll agree to a gradual reduction.
Certainly don't take out a loan.
If they won't agree to the gradual reduction then I'd suggest opening a new bank account elsewhere with an unconnected bank and having your wages etc paid into that account. You can then set up a standing order for £200 a month to go into the overdraft account. There is a risk with this that it will affect your credit history so if they'll come to an amicable agreement where you can keep the overdraft based on your new salary and just reduce it over time this would be preferable.

j.e.j.

Firstly well done on getting a job that pays £28K :T Not easy these days.

My finances were in a right old pickle after leaving uni, though this was many years ago now. I owed HSBC about £2000 or so.

I'd suggest you find out what %age interest you'd be paying on this overdraft now it's no longer at zero% and see if you can get a loan (with cheaper interest rate) to pay it off? You wouldn't need to get the loan from Halifax.

BeautyandtheBeast_3

Hi, I had a graduate bank account and student od with Barclays and hsbc,when i graduated and secured my first professional job, i had my salary going into HSBC and then i paid off what i could into barclays. I graduated 2001 and i had an od of 1900, i have 240 left. they have not once complained. could you do something similar?

x_Kaz_x

I'm not sure how the Halifax grad account works, but my Lloyds TSB grad account has a "gradual" decrease in the interest- and fee-free amount, however the actual overdraft amount could stay the same.

For example,

Up until now (I graduated last year) I could have a £2000 interest-free and fee-free overdraft (however, I kept mine at £1500)

In August 2011, my interest-free and fee-free amount would reduce down to £1,500 (the amount of my OD now anyway)

In August 2012, my interest-free and fee-free amount will reduce down to £1000, however I can I keep the £1500 overdraft limit, I would just pay interest and fees on any amount over the £1000.

In August 2013, my interest-free and fee-free amount will reduce down to £0 and I would have to pay the interest and fees any of the £1500 overdraft limit that I am using.

So if your Halifax grad account has a similar scheme of interest-free and fee-free drops it should mean that you wouldn't have to pay the entire overdraft back this month, it would just mean that you'll have to start paying the interest and fees. You could then pay the £200 a month against the overdraft that you had planned.

ExNicotineQueen

I too had a Halifax student overdraft maxed out at 3k (thankfully cleared a fair while back now) and my wages go into that account; all that happens is they will keep your overdraft at 3k unless you ask them to reduce it and your overdraft fees are added onto your statement at the end of the month.

Fees are £2 per day once you owe over 2.5k on the whole balance. In your case, if you are taking home roughly £1800, your balance will be -£1200 and assuming you withdrew £1600 and left £200 in there, your monthly fees would still be £60. If you paid £200 per month towards this and don’t use your overdraft in the meantime, then your balance will go down accordingly as below. Basically you want to get rid of this debt ASAP and throw as much money as possible towards clearing it.

Month 1
Balance: £3000
£200 paid less £60 fees
End balance: £2860

Month 2
Balance: £2860
£200 paid less £60 fees
End balance: £2720

Month 3
Balance: £2860
£200 paid less £60 fees
End balance: £2580

Month 4
Balance: £2580
£200 paid less £60 fees
End balance: £2440

Month 5
Balance: £2440
£200 paid less £30 fees
End balance: £2270

Month 6
Balance: £2270
£200 paid less £30 fees
End balance: £2100

tigermoon

Have you thought about opening a graduate account with another bank? I think you are still elidgible (sp?) for one within 3 years of graduation. You may be able to get an interest free overdraft with another bank for the full amount.

£60 a month in authorised OD fees seems extortionate. The other possibility might be a balance transfer to a 0% credit card, I don't know how easy it is to get one of these that will allow you to transfer money to your current account though. I know it used to quite easy but things have changed these days, unfortunately in this case. Or, depending on how disciplined you are, you could get a 0% for spending card (some of the deals are over a year long) and use your wages to get the OD paid off dead quick then pay the money off the credit card each month.

I know it seems crazy talking about taking out more debt to clear debt but sometimes it can be a viable option. I'd not go for a loan however as you will pay a lot more in interest over the term. It really depends on how likely you think you are to actually pay the money back in the time?

For the phone call, why not go back to the bank and ring them in branch? They will have the facility for you to do this and it will save you the rip-off phone charges.

Hope some of that helps xx

loppi

Hello! Thanks for your help, everyone!

I gave them a call today (on the standard number... no idea why he gave me the premium one but from his attitude it just seemed like he was being an !!!!!! over it) and they were actually quite helpful.

The first person I spoke to basically told me that it would become a normal account and I would be eligible to pay £2 a day if the overdraft is over £2500 and £1 if it's under that amount as mentioned before. He then put me on hold while he spoke to somebody else. Admittedly I didn't get everything he said as he had a strong Glaswegian accent and spoke very fast! I think he said that any money that goes into that account after the Student aspect of it expires won't be accessable - that's a slight concern as It takes over a month for head office to change it for me. He advised me the best way to deal with it is to open a second current account and just transfer money into the overdraft account incrementally.

He put me through to another department and the gentleman I spoke to opened me a second current account and asked me why I wanted two. When I explained he seemed confused and said he would have sworn that the money in the other account would still be accessable to me even as a non-graduate account. He said he couldn't be sure but if I suddenly have no access to it, I should speak to my branch and they should be able to sort something out for me.

So yes, slightly more confused but less worried than before. It's frustrating that they have to rely on a bunch of seperate specialist departments who aren't even allowed to communicate with each other.

As suggested before, I think I'll initially pay off £500 to get out of the dreaded £60 p/m fee!

Tixy

Second man in correct, if you have 2 accounts at the same bank they can offset the money from the one with money in it to the one which is overdrawn.

You need a new account with a seperate bank account to have your salary paid into. If you are paid towards the end of the money I would have thought it should be in plenty of time for headoffice to change where your salary is going - I would definitely ask them and tell them its important. If they say no maybe ask if you could be paid by cheque for this month instead.

rdchick

Hi Loppi,

I fell into a horrid Halifax trap this time last year.

I also graduated last year with a maxed out 3K overdraft. I go into the branch and see what they can do to help...

They offer me a £3500 loan to pay off my overdraft and student credit card but DIDN'T close down my overdraft so I still had a £3k one on a standard account. BIG MISTAKE!! obviously to my untrained eye I saw this as free money (where was this site to guide me then lol) and wahla I am in £7K+ worth of debt

Whatever you do DON'T fall into that trap xxx

ExNicotineQueen

loppi wrote: »

Hello! Thanks for your help, everyone!

I gave them a call today (on the standard number... no idea why he gave me the premium one but from his attitude it just seemed like he was being an !!!!!! over it) and they were actually quite helpful.

The first person I spoke to basically told me that it would become a normal account and I would be eligible to pay £2 a day if the overdraft is over £2500 and £1 if it's under that amount as mentioned before. He then put me on hold while he spoke to somebody else. Admittedly I didn't get everything he said as he had a strong Glaswegian accent and spoke very fast! I think he said that any money that goes into that account after the Student aspect of it expires won't be accessable - that's a slight concern as It takes over a month for head office to change it for me. He advised me the best way to deal with it is to open a second current account and just transfer money into the overdraft account incrementally.

He put me through to another department and the gentleman I spoke to opened me a second current account and asked me why I wanted two. When I explained he seemed confused and said he would have sworn that the money in the other account would still be accessable to me even as a non-graduate account. He said he couldn't be sure but if I suddenly have no access to it, I should speak to my branch and they should be able to sort something out for me.

So yes, slightly more confused but less worried than before. It's frustrating that they have to rely on a bunch of seperate specialist departments who aren't even allowed to communicate with each other.

As suggested before, I think I'll initially pay off £500 to get out of the dreaded £60 p/m fee!

The first guy was talking rubbish, you didn't need to open a seperate account, all that happens is it changes from 'Student' written at the top of your bank statement to 'Current' account, plus the charges. If you pay your wages in monthly you still have access to them, they don't swallow up your entire wage and make you pay the full balance there and then. It's in the bank's interest to charge you interest (pardon the pun).

Like I said, same thing happened to me, my account changed from student to normal current account and my wages were paid in there, nothing changed except the monthly charges were added to my account at the end of the month until I cleared my balance and asked them to withdraw the overdraft facility.