Graduate account changing...

curtizoo

Hello there,

I need some guidance. Basically I received correspondence today saying my account was changing to a 123 account with Santander from the Graduate account.

The way this works I think my overdraft limit will go from 2000 to 1200 which will leave me outside the limit in a couple months time, I have no idea on what to do as I don't want to be paying 800 out of my next wage all in one go to get back on track.

Can I switch accounts? What would people advise as I was not expecting this at all.

Thanks

Ed-1

curtizoo wrote: »

Hello there,

I need some guidance. Basically I received correspondence today saying my account was changing to a 123 account with Santander from the Graduate account.

The way this works I think my overdraft limit will go from 2000 to 1200 which will leave me outside the limit in a couple months time, I have no idea on what to do as I don't want to be paying 800 out of my next wage all in one go to get back on track.

Can I switch accounts? What would people advise as I was not expecting this at all.

Thanks

Surely you knew that the graduate account converts into a standard account after you've had it for 3 years? Why do you think your overdraft limit will reduce though - does the letter say it will? The overdraft will no longer be interest-free when the account converts but it doesn't usually mean the limit gets reduced.

What's the history of the account? Was it originally a student account? What was the overdraft limit originally? Presumably it converted to a graduate account in much the same way after you had it 3 years?

You can switch your account (as with any current account) but if you do it will mean you need to repay the whole of your outstanding debit balance immediately to Santander as you would no longer have an overdraft facility as your account needs to close as part of the switch or face debt recovery collections procedures (which would kill your credit file). So switching is absolutely the wrong thing to do.

curtizoo

I didn't know it switched & thought at some point there would be interest or some discussion over the account but this was back when I was 19 so that was 7 years ago & I have no clue what was said.

The account went from student to graduate to 123 in a couple months.

Obviously if the interest isn't too high I would probably like to keep the account, the other option would probably be a loan to pay it off but I've no idea which one to go with.

I just need an idea of which way to work towards to sort the problem really!

Ed-1

curtizoo wrote: »

I didn't know it switched & thought at some point there would be interest or some discussion over the account but this was back when I was 19 so that was 7 years ago & I have no clue what was said.

The account went from student to graduate to 123 in a couple months.

Obviously if the interest isn't too high I would probably like to keep the account, the other option would probably be a loan to pay it off but I've no idea which one to go with.

I just need an idea of which way to work towards to sort the problem really!

When did you open the account originally - what year? Was it a student account with an overdraft limit of £1500 at that time? When - what year - did it convert from student to graduate? Did the overdraft limit increase when that happened? Just trying to get a picture of the history of the account.

curtizoo

It was 2008 to the best of my knowledge, i think it started at £800 but then increased by several hundred each year.
It would of changed to graduate in 2012 I believe. And yes another increase was inclusive of that.

I think i might have to bite the bullet & clear it in full, luckily I don't have many bills so it should be possible.

I will probably leave Santander once it's cleared and take advantage of the signing bonus to at least recover £100 or so.

Unless you can think of anything else ?

Thanks

Ed-1

curtizoo wrote: »

It was 2008 to the best of my knowledge, i think it started at £800 but then increased by several hundred each year.
It would of changed to graduate in 2012 I believe. And yes another increase was inclusive of that.

I think i might have to bite the bullet & clear it in full, luckily I don't have many bills so it should be possible.

I will probably leave Santander once it's cleared and take advantage of the signing bonus to at least recover £100 or so.

Unless you can think of anything else ?

Thanks

Sounds a good plan. The important things to look at are: a) what the outstanding debit balance on the account is and b) what the arranged overdraft limit is and will be once the account changes.

Whatever the arranged overdraft limit is, you will be charged on any overdrawn balance once the account changes from the graduate account to a 123 current account. If the balance is within an arranged overdraft limit, you'll be charged £1 per day. If the balance goes beyond an arranged overdraft limit into an unarranged overdraft position, you'll be charged £6 per day. Santander cap the overdraft fees at (a rather high) £95 per account month. So you really need to be looking at getting the account into a positive credit balance position as soon as possible as these fees are quite high, but if that isn't a possibility and you remain in a neagtive balance than you need to be staying within the overdraft limit (which is why it's important you know what it will be - have you been told your overdraft limit is reducing from £2000 to £1200 when the account converts?).

You also need to know that the 123 current account comes with a £2 monthly fee anyway so you could convert it into an Everyday Current Account to avoid this.

anoncol

The Santander 123 account is actually quite sought over, so i would recommend switching it to another only if you dont have the bills to cover the £2 a month fee. Surely you will still have direct debits coming from your account for bills and this will make you cashback. Its worth working out how to get within the allowed free overdraft.