Staying in overdraft

jtreen

Hey everyone,

So my situation is this: I have had a Natwest current account for a few years and am now going to university so wanted to take advantage of the free railcard offer from them so I upgraded to a student account (they offer £500 interest free overdraft as well). Now all of the guides to student bank accounts say go for the one with the biggest guaranteed 0% overdraft which to start with is the Co-op. As they also had a very good customer satisfaction score I decided I would open this account as well.

Shouldn't be a problem for me to manage both at the same time; my loan will be paid into the Natwest account and I will use that as my main account as they say you must make at least 3 debit card transactions each month and pay in a certain amount blah blah, whereas Co-op does not mention this. Now ordinarily I doubt I would need to use any overdraft at all that often (maybe only at the very end of the term if I am slightly short) but I was thinking of going down the 'Stoozing' route and just putting most of my loan and most of the overdraft from both accounts into, for instance, the Santander 3% savings account and then just taking it out as and when I need it. Seeing as you can access money from that account instantly, I shouldn't think it would be too risky.

Now what I am wondering is this. Are there any implications with staying in my overdraft throughout the first year of my degree? Will I be given a bad credit score by either of the banks which could affect me in the future? Also, would the Co-op clock on and demand the money back seeing as I wouldn't be using it and it would have a constant overdrawn balance? If so, would it be better to split my usage between both accounts just so there is no chance of either of them asking for the overdraft back?

I'm fairly confident with keeping track of money and making sure I am comfortable with where it all is. Just wondering if there are any problems with my plan?

Thanks

Racheldevon

My understandin is that you can't have two student accounts at the same time, and that they monitor it to ensure your money goes into the account. Just use the natwest account, and providing you stay within your overdraft and don't go over it you won't have any issues with your credit rating. In your second and third years the overdraft with natwest increases.

Elle7

The co-op account does require you to deposit your student loan into it - as does the Natwest account. The information you get with the co-op account also mentions "regular transactions" and using it as your "main and only account".

You will be breaking the terms of both accounts if you open more than one student account. You might get away with it, but you might not. If the co-op don't feel you are running your account correctly, they can withdraw the overdraft at any moment, and that could leave you in trouble.

You also need to pay £300 into the co-op account to get the overdraft in the first place.

It is fairly obvious if you are using an account as your main account or not. The systems will flag up the lack of usage, and your overdrawn status.

As I said, you might get away with it fine, with no negative implications and neither bank realising what you are doing. But equally, you might not, and I'm not sure that it'd be worth the risk.

I'd agree with staying with Natwest for the rail card if that's important to you, but if you did want to switch to the co-op, they'll cancel your Natwest account and transfer your DDs etc over for you.

jtreen

Thanks for the replies guys. Wouldn't I be OK if I just used both accounts regularly? e.g. I split my loan between them and use both of them for my regular day to day spending?

atypical

jtreen wrote: »

Thanks for the replies guys. Wouldn't I be OK if I just used both accounts regularly? e.g. I split my loan between them and use both of them for my regular day to day spending?

Your student loan can only be paid into one account. You can probably get away with opening multiple accounts as long as both are active.

I've stoozed my overdraft for over 4 years and it has had no impact on my ability to get credit.

Racheldevon

No because my understanding is that your student loan needs to go in from the student loan company - so it would be obvious to the bank if you're not using it in this way. You can certainly have a student account and a normal current account with another bank, but not two student accounts at the same time. I think you'll find it's perfectly achievable to live with your loan and a £500 overdraft for year one, it used to go up to £2000 for the third year.

You might want to explore ways of budgeting, ensuring you can cook before you go so that you don't rely on expensive ready meals all the time, and make sure you do everything possible to work in the holiday periods so that you can build up some extra money to support you.

If you get really into difficultly whilst there then visit the welfare team and someone will advise you on any specific hardship type grants etc that you might be eligible for.

However in the first year really your outgoings are much less then the second and third when generally you're privately renting and responsible for household bills etc

Masomnia

I wouldn't risk it. If they find out you've broken the terms by having two student accounts you could well end up paying one (or both!) of them charges for being overdrawn + interest.

I'd pick one and then stooze the money from there. Getting greedy is where people get caught out, in my experience.

As per atypical's reply I've been doing it since I started uni in 2007 and have had no problems getting 3 credit cards and other overdrafts since.

fishybusiness

I look at it the other way - I would use both as I think that unless you get in to money troubles no one will check it.


Racheldevon said

No because my understanding is that your student loan needs to go in from the student loan company - so it would be obvious to the bank if you're not using it in this way

That is what I thought, but I received a phone call from the Cooperative bank yesterday about the student account I have just opened. The rep asked me how I would use the account, and explained the £300 pay in required to activate the overdraft. I explained I use the Santander 123 account for bill payment, to get their cashback, and will use my Coop student account for card purchases.

He was fine with that and pointed out the account simply needs using regularly. Perhaps the only issue is that you may not see an overdraft increase in your second and third years from the bank you do not use to pay your SFE loan in to.

jtreen

fishybusiness wrote: »

I look at it the other way - I would use both as I think that unless you get in to money troubles no one will check it.


Racheldevon said



That is what I thought, but I received a phone call from the Cooperative bank yesterday about the student account I have just opened. The rep asked me how I would use the account, and explained the £300 pay in required to activate the overdraft. I explained I use the Santander 123 account for bill payment, to get their cashback, and will use my Coop student account for card purchases.

He was fine with that and pointed out the account simply needs using regularly. Perhaps the only issue is that you may not see an overdraft increase in your second and third years from the bank you do not use to pay your SFE loan in to.

That is what I thought. I doubt they would care where the money comes from, as some people don't receive loans at all so they couldn't base it on that. As long as it is used regularly I would have thought it was fine.

Elle7

It's your choice, and if you are comfortable with it, go for it.

It does have benefits. It's just the other side of the coin that is difficult - and I saw a surprising amount of people suffer for having more than one last year, when I had never known the banks to care before.

When you open the co-op account, it does ask about income etc. I wouldn't send your SFE paperwork - that way, they won't expect it, and it might not flag up on their system when it doesn't arrive.

the-mango

Firstly, I don't think they don't care where the money comes from, I haven't/don't always get a loan so I just make sure I move money into my NatWest account and use it sporadically ie have my phone bill set up from there and use the debit card when I'm out occasionally.

I'm pretty sure teh only bank who's t&cs actually state you can't have more than one student account is Lloyds TSB, as I stooze my overdrafts and I haven't got a Lloyds account because I don't want to break those terms.

Elle7, how did people suffer from having more than 1 account?

The only thing I can say in that it might have negatively affected me is I got declined for the Aqua credit card (which I wanted to use to build my credit rating up), but alls well that ends well because my other bank offered me a credit card anyway