Student Bank Overdraft

CMoCupcake

My son has a student bank overdraft. He graduated a year ago. His account is about to default to an account with interest. He has researched graduate accounts but is being given the runaround and told he has to pay off his overdraft before he can get another interest free account. What advice can you give?

dizzie

If I have this right CMoCupcake, what you are saying is that he can get a graduate account that also offers a 0% overdraft facility.....but only if he pays his student overdraft off first?

I'm not sure how large his overdraft is, and having no experience of this scenario myself, I can't say whether this is the norm or not (maybe someone else can).

If I was in your son's situation, I'd be looking to do a money shuffling exercise. Is there any way he could temporarily find the money to pay off the overdraft on one account.....and then maybe open a graduate account asap afterwards? For example, if a family member was willing and able to loan him the money for a few weeks? Or, if he has a sizeable expenditure and is earning, maybe he could get a 0% credit card deal - whack as much of his expenditure over to that as possible so as to try to give his bank account chance to clear the overdraft. Then when he gets his new account, he could clear the card by utilising the new 0% overdraft facility.

Just my ideas, but it's a difficult question to try to help with without knowing the overdraft amount and whether any of the two options above are suitable for your son's circumstances.

CMoCupcake

He says it's 2k. He has a full time job but it's minimum wage and so with rent and bills is finding it difficult to manage his finances anyway. But maybe this is a short term solution that I could help him with? I see what you are saying....

dizzie

I think it's really tough out there for young people now CMoCupcake and it sounds as though he's going to find it difficult to save anything much to bring his bank balance back into the black anytime soon.

Only other advice I can suggest to try to get this overdraft cleared longer term (since graduate accounts only offer 0% deals for a limited time) is for him to:

(i) Use this site, with its wealth of money saving ideas (the few pounds here and there can really add up)

(ii) Look to make sure that he is receiving any benefits that he is entitled to for being on a low wage (https://www.turn2us.org.uk)

(iii) Try to find another job with better pay (or a promotion opportunity with better pay with his current employer) if possible - although I know this can be easier said than done.

Wishing you and your son all the best!

Masomnia

How many different banks has he spoken to about graduate accounts?

Especially as he has a stable income he might be able to find one that will accept a transfer.

The other option may be just to open a graduate account with another bank and ask for as big an overdraft as they will give, and manually transfer as much of his current overdraft to one with 0% as possible. That way at least he'll be paying interest on a smaller balance.

CMoCupcake

I have passed all these useful tips onto my son. If there's any update, I'll let you know!