Advice needed on my idea

dancingfairy

Go for it. Why not. I tried to leave enough in my account to live on for a few months and a 200 pound buffer just in case and anything else I stashed in a savings account - o.k i did not make a huge amount of money but I enjoyed it all. Obviously I kept an eye on my balance and when needed topped it up or withdrew to put more in the savings account. I made a bit of money out of it - not much but if I had done it over 4 years it would all have added up (I only thought of it in my final year). Yes in theory they could cancel it at any time but then you just transfer your savings back in and you haven't lost anything.
I am a bit worried by your statment of just paying the minimum off you credit card though - it might make you a better prospect in terms of people lending you more money but you are likely to get stung in terms of interest and it will almost certainly wipe out your gains from withdrawing your money from your overdraft and putting it into a savings account. Yes you might get turned down by a few credit cards occasionally but I would have thought it would be better to pay your credit card off in full every month. I have done this since I was 18 with my credit cards and have been through quite a few with different offers etc and I was only turned down once and that was for too low an income. I must have had about 10 or so different credit /store cards in the last 6 years (not all at once though). P.S If you don't pay off your store cards in one go these can be really lethal they can charge ridiculous amounts of interest like 24% which would really get you into a mess.
So my advice would be go for the stoozing thing but be careful and if you start to get things going wrong - get out of the game - you don't want to loose money after all.

superstar_2

This is what i have been told:

Authorised overdraft

Up to £2,750 Interest-free (0% EAR* variable)

More than £2,750 0.58% per month (7.2% EAR*)

Unauthorised overdraft

1.82% per month (24.2% EAR*)

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I dont understand what does it mean by autorised more than 2750 and unauthorised more than 2750?

I have been given 2500 overdraft which means, as long as i am within it, it doesnt cost me anything, did i get that right?

chris8842

Superstar,

Correct. The bank are providing you with an authrorised overdraft facility of £2,500. Therefore, from the figures you provided the facility would have an interest rate of 0% EAR - interest free!

They are saying that if they agree further overdraft facilites up to £2750 in total, then it will remain interest free. However, authorised (i.e. agreed in advance) overdraft facilities of over £2750 will be charged at a monthly interest rate of 0.58%. Therefore an authorised overdraft of say £3000 would have a monthly interest of 0.58% applied to the last £250 portion, with the first £2750 remaining interest free.

Unauthorised rates are for when you go over your agreed overdraft limit without permission. This get's very expensive!

I hope that makes sense.

rainy_dave

chris seems to have covered most of it there.

Would just draw your attention to the "variable" attached to the 0% AER overdraft rate. Your bank are reserving the right to change the interest rate at any time, although there should be a proper notice period.

Additionally, they can demand repayment in part or in full of any agreed overdraft facility at any time. Whilst this is uncommon with student accounts that are well maintained the recent increase in intra-bank lending rates as a result of the so called "credit-squeeze" may see this start to change.

If you think you're organised enough to monitor it - give it a go! Good luck.

superstar_2

Thanks Chris and Dave, appreciated!

Re: Dave - So, there is the variable element which means they can change the overdraft limit and ask for repaymeny. I was told that it is reviewed annually on whether they want to continue with that amt of overdraft. My idea is to transfer that money into my savings and earn some interests, but if they decide to call back the overdraft (will they be telling me and giving me a notice? 14 days?) then i will stop the game and transfer back into my current acc, if that makes sense?

rainy_dave

Superstar,

As mentioned, it is rare for student accounts to have their o/d facilities removed or reduced, so long as the account is being maintained properly i.e. not exceeding agreed overdrafts, used as your main bank account (common condition for student acc's is that your student loan is paid into that account). So, as long as you stick to the authorised overdraft limits I can't see them demanding repayment. If they chose to there would have to be a notice period, which will be in the small print somewhere 14 - 28 days notice is common.

Dave