Making money off of my overdraft - damaging?

Starlighthappiness

Hi,

I currently have a £1000 debt on my student overdraft and £400 debt on an interest free credit card. I currently have £1500 in savings in a TSB current account earning 3% interest. Am I harming my credit score by not paying the debt off in full and just making the minimum repayments whilst earning interest on the money?

[Deleted User]

You don't have a credit score, but lenders may view your file and be concerned that you are living in your overdraft.

Candyapple

Is the £1k student overdraft interest free?

If it is, I don't really see a problem.

If it's not, use £1k from your savings to clear the overdraft. As for your £400 debt on interest free card, make sure you have enough funds to clear the balance at the end of the term - apart from that you are fine just to pay the minimum repayment because it's a promotional rate.

Starlighthappiness

Yep - the overdraft is 0% also.

theburningcat

I have a 0% £1800 overdraft at Santander with their Postgrad account. I'm not really a postgrad any more but they don't seem to have noticed. The account is £1795 overdrawn, all of which is sitting in my 1.5% Atom Bank account.

I've been doing this for about a year and I've still been able to get everything I need. I probably am taking a credit "score" hit but lately it seems like I'm attractive enough for it to not matter.

If you are a student then I probably wouldn't do it. If you're 18-21 you might just be shooting yourself in the foot if you need a phone contract, a rent check etc., since you'll have very little credit history.

Also, if you're using 100% of your available credit, that will look very very bad. I have a credit card and charge card that are always paid in full every month, a phone contract that is always paid on time and another overdraft that I never use.

Starlighthappiness

theburningcat wrote: »

I have a 0% £1800 overdraft at Santander with their Postgrad account. I'm not really a postgrad any more but they don't seem to have noticed. The account is £1795 overdrawn, all of which is sitting in my 1.5% Atom Bank account.

I've been doing this for about a year and I've still been able to get everything I need. I probably am taking a credit "score" hit but lately it seems like I'm attractive enough for it to not matter.

If you are a student then I probably wouldn't do it. If you're 18-21 you might just be shooting yourself in the foot if you need a phone contract, a rent check etc., since you'll have very little credit history.

Also, if you're using 100% of your available credit, that will look very very bad. I have a credit card and charge card that are always paid in full every month, a phone contract that is always paid on time and another overdraft that I never use.

Thanks for this. I'm 24, still a student and graduating this summer. I am using 50% of the credit on both the student overdraft and the 0% interest account. I have a mobile phone contract and a further £250 overdraft with first direct that I don't touch.

I think I might pay off the credit card with some more of the overdraft, perhaps just to show that I am capable of clearing a balance each month whilst still getting the 3% interest on the £1500

binaryuniverse

theburningcat wrote: »

I have a 0% £1800 overdraft at Santander with their Postgrad account. I'm not really a postgrad any more but they don't seem to have noticed. The account is £1795 overdrawn, all of which is sitting in my 1.5% Atom Bank account.

1.5% is a bit of waste. I'd move it in to a Nationwide FlexDirect current, if you don't already have one. 5% is a lot better than 1.5%.

Just be aware they can call the overdraft in at any time. But, if you're just using it for stoozing anyway, should all be good on that front.

theburningcat

Starlighthappiness wrote: »

Thanks for this. I'm 24, still a student and graduating this summer. I am using 50% of the credit on both the student overdraft and the 0% interest account. I have a mobile phone contract and a further £250 overdraft with first direct that I don't touch.

I think I might pay off the credit card with some more of the overdraft, perhaps just to show that I am capable of clearing a balance each month whilst still getting the 3% interest on the £1500

You might be ok but considering your limits and income etc., I probably wouldn't do it.

binaryuniverse wrote: »

1.5% is a bit of waste. I'd move it in to a Nationwide FlexDirect current, if you don't already have one. 5% is a lot better than 1.5%.

Just be aware they can call the overdraft in at any time. But, if you're just using it for stoozing anyway, should all be good on that front.

Because my Tesco accounts, regular savers and LISA were full. It's becoming a PITA keeping on top of all of the standing orders etc., not worth the time compared to the £15/month cashback from Amex and switching bonuses in retrospect. Atom Bank is good because it's easy - money goes in at the beginning, more money comes out at the end. Simples.