-£1800 graduate overdraft.. But a mum

eskbanker

masonic wrote: »

The OP was in a niche group (university students) who are offered interest-free overdrafts during their time at university and a few years beyond. It makes sense for that group to borrow using overdrafts rather than credit cards, store cards, personal loans etc. For most people, overdrafts with favourable terms are more difficult to obtain and so borrowing takes place by different means. However, the specific type of debt is not relevant to the financial impact, especially when it stops being an interest-free debt as is happening to the OP. So I think the level of personal debt in general is what needs to be compared. We are perhaps assuming the OP doesn't also have maxed out credit cards, personal loans and/or store card debt to add to her £1,800, but this would probably have been mentioned.

Student loans are of course different, because a stay at home mum is likely to have these written off in due course and they are effectively another layer of income tax prior to that.

Yes, I wouldn't necessarily disagree with any of that but the specific statement being discussed was whether or not it's true that £1,800 is a big overdraft, rather than an assessment of overall indebtedness.

However, even if in objective terms it could be considered not to be, my main points were that from the perspective of someone not earning it is big, and that the tone with which it was dismissed, even if intended as reassuring, could easily have the opposite effect.

masonic

eskbanker wrote: »

Yes, I wouldn't necessarily disagree with any of that but the specific statement being discussed was whether or not it's true that £1,800 is a big overdraft, rather than an assessment of overall indebtedness.

However, even if in objective terms it could be considered not to be, my main points were that from the perspective of someone not earning it is big, and that the tone with which it was dismissed, even if intended as reassuring, could easily have the opposite effect.

Acknowledged, and I suspect looking from different perspectives will lead to different views. For example, the MSE article on student bank accounts (https://www.moneysavingexpert.com/students/student-bank-account/#topaccounts) considers £3,000 a big overdraft, whereas £1,500-2,000 is labelled 'decent'. That's for students. While students are non-earners, I suppose they have an income of sorts in most cases, albeit a borrowed one.

In my experience, I was offered and took up an overdraft of this size during my time as a student, but was never offered anything as generous since, despite my income being many times higher than it was as a student. However, I now have access to credit cards with high limits, which I never could have got as a student.

I agree, for someone who is a non-earner £1,800 of debt is a much bigger problem than for someone who earns enough to cover their bills with at least a little left over. This is the sting in the tail of debt, and can affect those who unexpectedly lose their income also - as many people find out. I wonder what proportion of students take up these overdrafts, and later find themselves struggling to clear them.

eskbanker

masonic wrote: »

Acknowledged, and I suspect looking from different perspectives will lead to different views. For example, the MSE article on student bank accounts (https://www.moneysavingexpert.com/students/student-bank-account/#topaccounts) considers £3,000 a big overdraft, whereas £1,500-2,000 is labelled 'decent'. That's for students. While students are non-earners, I suppose they have an income of sorts in most cases, albeit a borrowed one.

In my experience, I was offered and took up an overdraft of this size during my time as a student, but was never offered anything as generous since, despite my income being many times higher than it was as a student. However, I now have access to credit cards with high limits, which I never could have got as a student.

I agree, for someone who is a non-earner £1,800 of debt is a much bigger problem than for someone who earns enough to cover their bills with at least a little left over. This is the sting in the tail of debt, and can affect those who unexpectedly lose their income also - as many people find out. I wonder what proportion of students take up these overdrafts, and later find themselves struggling to clear them.

Again I think we're largely on the same page here, and I definitely agree that students are likely to have a much larger proportion of their debt in overdraft form - the cynic would observe that banks readily throwing significant amounts of (initially) low-cost debt at students is an effective way of getting their hooks into them and makes it harder for them to go elsewhere once the rates are aligned with market norms, hence OP's situation....