Student account deficit banking enquiries

firsttimestudent

Hi. I just got my Halifax Student A/c up and running. Was granted a £1,000 interest free overdraft. I am thinking of doing what was suggested in Martin's article about deficit banking, i.e. transferring the interest free OD to a decent savings account to earn interest.

My love is still with Lloyds, planning to use it mainly. Hence I am thinking of feeding my Lloyds account with most of my Halifax interest free OD, and when any funds reach my Halifax a/c, I will let them sit in there for say a week, then transfer over to Lloyds.

I have a few questions, do feel free to answer part or all of it.

1) Of course I am planning to get the full OD of £2,750 with Halifax at a later date. Will my account behaviour (funded regularly, but always in overdraft) be detrimental of me getting the full £2750?

2) Will this constant overdraft be detrimental to my credit rating (Experian and Equifax), when seen by potential creditors?

3) I have heard of miserable stories in the news in the past like students committing suicide after HSBC withdraws a student's OD suddenly and forces him to pay it back immediately. I have also heard of people suddenly receiving letters from bank saying that their account has been passed to a debt collection agency in this forum. I wonder why did that happen to them, and will my suggested banking behaviour trigger such a situation (removal of OD and passing on to credit collection agencies), which will definitely only stain my credit rating?

4) I also have a Halifax Web Saver now. Will Halifax be unhappy to see me in OD in my Student A/c, while being in high credit at the Web Saver a/c?

Sorry plenty of questions, but will be grateful for any answers. Cheers!!!

firsttimestudent

Any able to help please?!

Broke_Student

Of course I am planning to get the full OD of £2,750 with Halifax at a later date. Will my account behaviour (funded regularly, but always in overdraft) be detrimental of me getting the full £2750?

Yes.
First of all NOBODY has ever got the full £2750 in their first year - it's an advertising trick. If you request more from halifax they say the higher amount is reserved for customers with a good history with the business (even though I had been with them since I was 14).
You may well be given the full amount in your third year as long as you keep requesting it and keep the account active i.e. 3 larger deposits a year (usually student loan).

2) Will this constant overdraft be detrimental to my credit rating (Experian and Equifax), when seen by potential creditors?
It will show on your credit report as the overdraft is credit. However, credit reports do not show how much you have borrowed or paid back - they only show late payments.
In your case having the overdraft on your credit report will only be a GOOD thing! This is as you will probably have no previous credit history (which itself is bad, maybe worse than having a bad credit history). This will work in your favour in the future when appyling to credit cards and mobile phone contracts etc...


3) I have heard of miserable stories in the news in the past like students committing suicide after HSBC withdraws a student's OD suddenly and forces him to pay it back immediately. I have also heard of people suddenly receiving letters from bank saying that their account has been passed to a debt collection agency in this forum. I wonder why did that happen to them, and will my suggested banking behaviour trigger such a situation (removal of OD and passing on to credit collection agencies), which will definitely only stain my credit rating?

As long as you keep your side of the T&Cs (i.e. make 3x large deposits a year) nothing will go wrong and you will not have to pay back anything until after you graduate. HSBC is the only bank, as far as I know, who starts charging interest as soon as you graduate. They do not ask for the full amount back as long as you pay the interest and reduce your overdraft by a set amount each year. The people who get passed onto debt collecting agencies are usually those that drop out of their degrees early and not tell the bank, or fail to make the minimal yearly payments after they graduate.

4) I also have a Halifax Web Saver now. Will Halifax be unhappy to see me in OD in my Student A/c, while being in high credit at the Web Saver a/c?
I maxed out my overdraft and transfered it all directly to my savings account (which has a relatively large amount) and they have not said a thing. If they want me to have my savings with them then they will have to stay put...

Sorry plenty of questions, but will be grateful for any answers. Cheers!!!

antuk

Broke_Student wrote: »

As long as you keep your side of the T&Cs (i.e. make 3x large deposits a year) nothing will go wrong and you will not have to pay back anything until after you graduate...

Hi, i have been told by one of the bank managers you don't have to make large deposits as long as you keep the account active, he said that as long as you deposit at least £250 quarterly there will be no probs...

firsttimestudent

Hey, thanks so much for your replies.

Was wondering - will Halifax be that particular about where the 3 large income + other regular smaller income come from? Currently all my income goes to my other bank (Natwest) - and I'm planning to feed Halifax from there.

I've talked to my branch - they said as long it's regular credit it's fine. I'm just asking here, as I know very often branch people can give misleading information. Does anybody have any experience about this? Thanks!

Broke_Student

firsttimestudent wrote: »

Hey, thanks so much for your replies.

Was wondering - will Halifax be that particular about where the 3 large income + other regular smaller income come from? !

You don't need regular small income, just the three or four large deposits. As antuk said £259 may be enough but I would suggest depositing 3x £500 and withdrawing the cash over the next few weeks so the account appears more active.

They are not picky about where the money comes from.
I think I remember the T&Cs stating that you must fund the account with your 'source of income'. This may be any one or more of loans/grants/bursary/parental contribution/scholarship/job etc...
Some rich kids don't take out student loans - they are still allowed student accounts!

Broke_Student

Quote:

If you have an arranged overdraft you must pay your salary, grant cheque, student loan, parental contribution or other regular credit into your account. Overdrafts are repayable on demand. How much we lend depends on our assessment of your circumstances. Full limits may not be granted on application.