Son's Student Account Overdraft

MissAT

My son had a Natwest Student Account during 2010-2012, the first years overdraft was fine, in summer he was fully overdrawn but that was OK when he got his next round of grants etc.

However in 2011 the terms of the overdraft changed, and in summer he got a letter telling him that no money been paid into the account for 4 months (which was obvious over summer and no bursaries being paid in)

I'm concerned as he got refered to a Natwest's payments dept. and asked him to put money in. This was 2 week before he was set to get his next round of bursaries.

Will he have a 'black mark' against him on a credit report for this, as really it wasn't his fault and he had done the same as before which met with no problem.

He wasn't over the overdraft limit or anything just no money had been put into the account for 4 months over summer.

grumbler

MissAT wrote: »

....However in 2011 the terms of the overdraft changed,

How have they changed?

and in summer he got a letter telling him that no money been paid into the account for 4 months (which was obvious over summer and no bursaries being paid in)

I'm concerned as he got refered to a Natwest's payments dept. and asked him to put money in. This was 2 week before he was set to get his next round of bursaries.

Will he have a 'black mark' against him on a credit report for this, as really it wasn't his fault

Generally, all overdrafts, even student ones, are not intended for a long-term borrowing and are repayable on demand. If the T&C say that some amounts have to be credited to the account every X months or so and there were no any credits, then yes, late payments can be reported.

MissAT

The T&Cs changed so that money was to be deposited ever 4 months,

As soon as my son recieved the notice that he was being refered to the re-payments part of the bank I gave him some money to put in.

A lot of his uni-friends also had the same problem, and the T&Cs were soon changed again after this instance to reflect the 5 month gap between bursary payments.

As he was refered, than payed some money straight away, will this be shown on a future credit report?

If so, is there any action he could take to have this ammended?

meer53

Don't know what Natwests procedures are but where i work, dormant accounts aren't reported to the CRA's. Call Natwest and ask them.

grumbler

Why dormant? It was overdrawn and with debits only, not dormant.

JimmyTheWig

MissAT wrote: »

The T&Cs changed so that money was to be deposited ever 4 months,

...

will this be shown on a future credit report?

If so, is there any action he could take to have this ammended?

I'm slightly confused, OP.
Who says the terms have changed?
Did he get something to say that the terms had changed and money had to be deposited every 4 months? And he didn't do that? if so, on what basis would he be able to have the credit report ammended?

Or are you saying that you assume that they have changed because he didn't get a letter last year but did this year? If so, he needs to find out the rules for the overdraft.
Overdrafts are repayable on demand, so I doubt that the bank has done anything wrong in any event. But if he has done nothing wrong according to the terms then there is nothing negative to go on a credit report.

I'm also confused about timings. You say this happened over the summer. Do you know it is now then end of March?

meer53

Why dormant? It was overdrawn and with debits only, not dormant.


Accounts can be either credit dormant or debit dormant. Debit dormant accounts can be closed and a demand made for repayment of any debit balance. The OP said no credits had been paid in for 4 months, so it would have been classed as dormant.

Different banks (and accounts) can have different dormancy thresholds, obviously Natwest have this set up for student accounts where money doesnt come in regularly.

grumbler

meer53 wrote: »

...where i work, dormant accounts aren't reported to the CRA's. .

meer53 wrote: »

...
Accounts can be either credit dormant or debit dormant.

Does this depend on the balance (debit/credit) or the activity (no debits/credits)?

The OP said no credits had been paid in for 4 months, so it would have been classed as dormant.

And what is the reason for not reporting such account to CRAs?

meer53

An account will be reported as dormant whether there is a debit or credit balance, if it isn't being used. Doesn't matter what the balance is. I look at dormant accounts, they appear on a report if there hasn't been any activity after about 30 days although we can change this in certain circumstances eg. we have a customer who lives abroad who gets pension credits into his account every 6 months and makes very irregular withdrawals. I would imagine Natwest will have a similar system for student accounts where they are only funded by student loans etc.

Dormant accounts are still included on credit reports but the dormancy isn't shown. They're just listed as normal. A dormant account won't have a detrimental effect.

stclair

The account will report as normal for about 6 months if the account is unused then it will stop reporting or report as a "U" until new activity on the account takes place.

3 STUDENT ACCOUNT
3.1 Student Accounts are only available to individuals who have been resident in the UK for 3 years or more who are:
(a) completing a full time undergraduate course lasting at least 2 years;
(b) completing a full time postgraduate course; or
(c) training as a nurse,
at a UK university or college of higher education.
3.2 You must use your Student Account as your main current account by depositing at least £750 every 6 months
and making at least 3 debit transactions every month. If you stop using your account as your main current
account, then the interest rate you pay on your arranged overdraft will revert to the standard rate which applies
to the Select Account. For details of our rates of interest see our leaflet ‘Personal & Private Current Account Fees
& Interest Rates’.

*This then changed however was not communicated in the T&Cs to every 4 months*

JimmyTheWig

stclair wrote: »

*This then changed however was not communicated in the T&Cs to every 4 months*

It appears that that change was short lived.
http://conversation.which.co.uk/money/natwest-student-account-changes-terms-and-conditions/

So I'm guessing the answer to

MissAT wrote: »

Will he have a 'black mark' against him on a credit report for this

is "no". Because (a) the threat to those who fell foul of the rules was a loss of the "interest-free" status of the overdraft rather than a default and (b) the change was only in place for such a short time I would like to think that they would have sorted things out anyway.


But, importantly, if anyone is worried about their credit report they should check it. You can get one permanently for free from Noddle.