Overdraft, when not really needed

ForumUser7

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

Bridlington1

I would take the overdraft. It's interest free so if you don't need it you can stooze it.

itsthelittlethings

Do you think you'll be tempted to use it?

TheBanker

ForumUser7 said:

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

I don't think an unused or occasionally used overdraft will make much difference to credit applications. But if you're a student, does it even matter? Are you planning to apply for other credit in the next year or so? If you are, I'd suggest lack of income might be a bigger barrier than having an overdraft. As you suggest, having access to credit and using it responsibly is generally seen as a good thing by lenders, so long as the amounts are not excessive.

I'd take the overdraft - it might be useful to tide you over if you ever mis-calculate your expenditure, and could avoid direct debits/standing orders being bounced.

I have an overdraft on my current account. It's not free, and I never use it but it's a kind of security blanket that avoids bounced direct debits (e.g. if there was a problem with my salary) and means I have easy access to some cash in a dire emergancy. 

When I was a student (a long time ago), I lived in my overdraft because it was interest free. I kept my student loan and income from my part time job in my savings account, and just topped the current account up when I got close to the limit.

One of my early banking jobs was working in a university branch, and students living in their overdrafts was not uncommon. Some genuinly had no other money as they'd spent their loan/grant, didn't have a job, didn't get anything from parents etc. Others were doing what I did, and keeping their cash in savings to earn a little bit of interest. 

surreysaver

It won't do any harm; in fact, if you stay within the overdraft limit, it will look good on your credit history when you come to apply for other products in the future such as credit cards or mortgages.
If its interest free, you can transfer the interest free limit to a savings account and earn interest (commonly known as Stoozing)

ForumUser7

Thanks everyone for your responses.

Bridlington1 said:

I would take the overdraft. It's interest free so if you don't need it you can stooze it.

Would stoozing it not look bad on the report?

itsthelittlethings said:

Do you think you'll be tempted to use it?

No, I’ve had a combined credit limit higher than the overdraft over the last few months and I’ve not gone over, and always paid off in full. I might dip into it when waiting for funds transfers, but will always reimburse in a couple of days. Unless there was like some unforeseen emergency.

TheBanker said:

ForumUser7 said:

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

I don't think an unused or occasionally used overdraft will make much difference to credit applications. But if you're a student, does it even matter? Are you planning to apply for other credit in the next year or so? If you are, I'd suggest lack of income might be a bigger barrier than having an overdraft. As you suggest, having access to credit and using it responsibly is generally seen as a good thing by lenders, so long as the amounts are not excessive.

I'd take the overdraft - it might be useful to tide you over if you ever mis-calculate your expenditure, and could avoid direct debits/standing orders being bounced.

I have an overdraft on my current account. It's not free, and I never use it but it's a kind of security blanket that avoids bounced direct debits (e.g. if there was a problem with my salary) and means I have easy access to some cash in a dire emergancy. 

When I was a student (a long time ago), I lived in my overdraft because it was interest free. I kept my student loan and income from my part time job in my savings account, and just topped the current account up when I got close to the limit.

One of my early banking jobs was working in a university branch, and students living in their overdrafts was not uncommon. Some genuinly had no other money as they'd spent their loan/grant, didn't have a job, didn't get anything from parents etc. Others were doing what I did, and keeping their cash in savings to earn a little bit of interest. 

Thanks - that’s a good idea I think to take it and use it as kind of emergency funds. I’ve not been so on the ball recently just due to high workload and twice my card declined due to insufficient funds. I had the funds in another account, but forgot to transfer them. This would act as a good safety net.

surreysaver said:

It won't do any harm; in fact, if you stay within the overdraft limit, it will look good on your credit history when you come to apply for other products in the future such as credit cards or mortgages.
If its interest free, you can transfer the interest free limit to a savings account and earn interest (commonly known as Stoozing)

That’s good to know - thank you. I already have £50 IF OD with Lloyds, and I use that for the reimbursed fee. Not sure if that ever registers as being in OD though as the fee goes out and is waived so close together normally.

I’d considered doing stoozing before, but wouldn’t this be bad for the credit report? Looks like I really need it, and am in persistent debt. Though it may be standard among students, I’m trying to build an exemplary report.

TheBanker

ForumUser7 said:

Thanks everyone for your responses.

Bridlington1 said:

I would take the overdraft. It's interest free so if you don't need it you can stooze it.

Would stoozing it not look bad on the report?

itsthelittlethings said:

Do you think you'll be tempted to use it?

No, I’ve had a combined credit limit higher than the overdraft over the last few months and I’ve not gone over, and always paid off in full. I might dip into it when waiting for funds transfers, but will always reimburse in a couple of days. Unless there was like some unforeseen emergency.

TheBanker said:

ForumUser7 said:

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

I don't think an unused or occasionally used overdraft will make much difference to credit applications. But if you're a student, does it even matter? Are you planning to apply for other credit in the next year or so? If you are, I'd suggest lack of income might be a bigger barrier than having an overdraft. As you suggest, having access to credit and using it responsibly is generally seen as a good thing by lenders, so long as the amounts are not excessive.

I'd take the overdraft - it might be useful to tide you over if you ever mis-calculate your expenditure, and could avoid direct debits/standing orders being bounced.

I have an overdraft on my current account. It's not free, and I never use it but it's a kind of security blanket that avoids bounced direct debits (e.g. if there was a problem with my salary) and means I have easy access to some cash in a dire emergancy. 

When I was a student (a long time ago), I lived in my overdraft because it was interest free. I kept my student loan and income from my part time job in my savings account, and just topped the current account up when I got close to the limit.

One of my early banking jobs was working in a university branch, and students living in their overdrafts was not uncommon. Some genuinly had no other money as they'd spent their loan/grant, didn't have a job, didn't get anything from parents etc. Others were doing what I did, and keeping their cash in savings to earn a little bit of interest. 

Thanks - that’s a good idea I think to take it and use it as kind of emergency funds. I’ve not been so on the ball recently just due to high workload and twice my card declined due to insufficient funds. I had the funds in another account, but forgot to transfer them. This would act as a good safety net.

surreysaver said:

It won't do any harm; in fact, if you stay within the overdraft limit, it will look good on your credit history when you come to apply for other products in the future such as credit cards or mortgages.
If its interest free, you can transfer the interest free limit to a savings account and earn interest (commonly known as Stoozing)

That’s good to know - thank you. I already have £50 IF OD with Lloyds, and I use that for the reimbursed fee. Not sure if that ever registers as being in OD though as the fee goes out and is waived so close together normally.

I’d considered doing stoozing before, but wouldn’t this be bad for the credit report? Looks like I really need it, and am in persistent debt. Though it may be standard among students, I’m trying to build an exemplary report.

I think it depends on what you're planning to apply for. If you're likely to be a applying for a mortgage in the next year or so, then I would not do it. If you're not planning on taking on any major credit committments it probably won't make any difference. 

Brie

Your credit report will show every month how much of your overdraft you are using so if you are stoozing with it that will show up.  But if you then pay it all off that will slowly fade into the past and show that your are responsible.  A bank or credit card company won't know why you were using the overdraft - stoozing, buying food or booking a week in the sun will look exactly the same to them.  

Just remember that it can take 2 - 3 months for your credit report to update so if you used your OD in December and cleared it in January that might just be showing up now.  

ForumUser7

TheBanker said:

ForumUser7 said:

Thanks everyone for your responses.

Bridlington1 said:

I would take the overdraft. It's interest free so if you don't need it you can stooze it.

Would stoozing it not look bad on the report?

itsthelittlethings said:

Do you think you'll be tempted to use it?

No, I’ve had a combined credit limit higher than the overdraft over the last few months and I’ve not gone over, and always paid off in full. I might dip into it when waiting for funds transfers, but will always reimburse in a couple of days. Unless there was like some unforeseen emergency.

TheBanker said:

ForumUser7 said:

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

I don't think an unused or occasionally used overdraft will make much difference to credit applications. But if you're a student, does it even matter? Are you planning to apply for other credit in the next year or so? If you are, I'd suggest lack of income might be a bigger barrier than having an overdraft. As you suggest, having access to credit and using it responsibly is generally seen as a good thing by lenders, so long as the amounts are not excessive.

I'd take the overdraft - it might be useful to tide you over if you ever mis-calculate your expenditure, and could avoid direct debits/standing orders being bounced.

I have an overdraft on my current account. It's not free, and I never use it but it's a kind of security blanket that avoids bounced direct debits (e.g. if there was a problem with my salary) and means I have easy access to some cash in a dire emergancy. 

When I was a student (a long time ago), I lived in my overdraft because it was interest free. I kept my student loan and income from my part time job in my savings account, and just topped the current account up when I got close to the limit.

One of my early banking jobs was working in a university branch, and students living in their overdrafts was not uncommon. Some genuinly had no other money as they'd spent their loan/grant, didn't have a job, didn't get anything from parents etc. Others were doing what I did, and keeping their cash in savings to earn a little bit of interest. 

Thanks - that’s a good idea I think to take it and use it as kind of emergency funds. I’ve not been so on the ball recently just due to high workload and twice my card declined due to insufficient funds. I had the funds in another account, but forgot to transfer them. This would act as a good safety net.

surreysaver said:

It won't do any harm; in fact, if you stay within the overdraft limit, it will look good on your credit history when you come to apply for other products in the future such as credit cards or mortgages.
If its interest free, you can transfer the interest free limit to a savings account and earn interest (commonly known as Stoozing)

That’s good to know - thank you. I already have £50 IF OD with Lloyds, and I use that for the reimbursed fee. Not sure if that ever registers as being in OD though as the fee goes out and is waived so close together normally.

I’d considered doing stoozing before, but wouldn’t this be bad for the credit report? Looks like I really need it, and am in persistent debt. Though it may be standard among students, I’m trying to build an exemplary report.

I think it depends on what you're planning to apply for. If you're likely to be an applying for a mortgage in the next year or so, then I would not do it. If you're not planning on taking on any major credit committments it probably won't make any difference. 

Only would be credit cards in the next couple of years really. Chase, if that ever comes out, Barclaycard rewards card when I’m eligible etc. Don’t want to apply for too many, but I’m not eligible for the ‘greats’ yet

TheBanker

ForumUser7 said:

TheBanker said:

ForumUser7 said:

Thanks everyone for your responses.

Bridlington1 said:

I would take the overdraft. It's interest free so if you don't need it you can stooze it.

Would stoozing it not look bad on the report?

itsthelittlethings said:

Do you think you'll be tempted to use it?

No, I’ve had a combined credit limit higher than the overdraft over the last few months and I’ve not gone over, and always paid off in full. I might dip into it when waiting for funds transfers, but will always reimburse in a couple of days. Unless there was like some unforeseen emergency.

TheBanker said:

ForumUser7 said:

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

I don't think an unused or occasionally used overdraft will make much difference to credit applications. But if you're a student, does it even matter? Are you planning to apply for other credit in the next year or so? If you are, I'd suggest lack of income might be a bigger barrier than having an overdraft. As you suggest, having access to credit and using it responsibly is generally seen as a good thing by lenders, so long as the amounts are not excessive.

I'd take the overdraft - it might be useful to tide you over if you ever mis-calculate your expenditure, and could avoid direct debits/standing orders being bounced.

I have an overdraft on my current account. It's not free, and I never use it but it's a kind of security blanket that avoids bounced direct debits (e.g. if there was a problem with my salary) and means I have easy access to some cash in a dire emergancy. 

When I was a student (a long time ago), I lived in my overdraft because it was interest free. I kept my student loan and income from my part time job in my savings account, and just topped the current account up when I got close to the limit.

One of my early banking jobs was working in a university branch, and students living in their overdrafts was not uncommon. Some genuinly had no other money as they'd spent their loan/grant, didn't have a job, didn't get anything from parents etc. Others were doing what I did, and keeping their cash in savings to earn a little bit of interest. 

Thanks - that’s a good idea I think to take it and use it as kind of emergency funds. I’ve not been so on the ball recently just due to high workload and twice my card declined due to insufficient funds. I had the funds in another account, but forgot to transfer them. This would act as a good safety net.

surreysaver said:

It won't do any harm; in fact, if you stay within the overdraft limit, it will look good on your credit history when you come to apply for other products in the future such as credit cards or mortgages.
If its interest free, you can transfer the interest free limit to a savings account and earn interest (commonly known as Stoozing)

That’s good to know - thank you. I already have £50 IF OD with Lloyds, and I use that for the reimbursed fee. Not sure if that ever registers as being in OD though as the fee goes out and is waived so close together normally.

I’d considered doing stoozing before, but wouldn’t this be bad for the credit report? Looks like I really need it, and am in persistent debt. Though it may be standard among students, I’m trying to build an exemplary report.

I think it depends on what you're planning to apply for. If you're likely to be an applying for a mortgage in the next year or so, then I would not do it. If you're not planning on taking on any major credit committments it probably won't make any difference. 

Only would be credit cards in the next couple of years really. Chase, if that ever comes out, Barclaycard rewards card when I’m eligible etc. Don’t want to apply for too many, but I’m not eligible for the ‘greats’ yet

If you're a student, I think low income is likely to be a bigger blocker to obtaining a (non-student) credit card - e.g. Barclaycard Rewards requires a minimum income of £20k. 

ForumUser7

TheBanker said:

ForumUser7 said:

TheBanker said:

ForumUser7 said:

Thanks everyone for your responses.

Bridlington1 said:

I would take the overdraft. It's interest free so if you don't need it you can stooze it.

Would stoozing it not look bad on the report?

itsthelittlethings said:

Do you think you'll be tempted to use it?

No, I’ve had a combined credit limit higher than the overdraft over the last few months and I’ve not gone over, and always paid off in full. I might dip into it when waiting for funds transfers, but will always reimburse in a couple of days. Unless there was like some unforeseen emergency.

TheBanker said:

ForumUser7 said:

Hi,

I’m eligible to get an interest free overdraft on my TSB Student Account.

I don’t anticipate I’ll need it, and if I did it’d only ever be for a couple of days while waiting for money from Coventry BS to come across.

Presumably it’s a good idea to go for it even if I won’t really use it?

On one hand, I’m thinking other lenders may be worried about the total amount of credit, but on the other hand they might think it’s good as I’m trusted and can manage it responsibly.

Thank you

I don't think an unused or occasionally used overdraft will make much difference to credit applications. But if you're a student, does it even matter? Are you planning to apply for other credit in the next year or so? If you are, I'd suggest lack of income might be a bigger barrier than having an overdraft. As you suggest, having access to credit and using it responsibly is generally seen as a good thing by lenders, so long as the amounts are not excessive.

I'd take the overdraft - it might be useful to tide you over if you ever mis-calculate your expenditure, and could avoid direct debits/standing orders being bounced.

I have an overdraft on my current account. It's not free, and I never use it but it's a kind of security blanket that avoids bounced direct debits (e.g. if there was a problem with my salary) and means I have easy access to some cash in a dire emergancy. 

When I was a student (a long time ago), I lived in my overdraft because it was interest free. I kept my student loan and income from my part time job in my savings account, and just topped the current account up when I got close to the limit.

One of my early banking jobs was working in a university branch, and students living in their overdrafts was not uncommon. Some genuinly had no other money as they'd spent their loan/grant, didn't have a job, didn't get anything from parents etc. Others were doing what I did, and keeping their cash in savings to earn a little bit of interest. 

Thanks - that’s a good idea I think to take it and use it as kind of emergency funds. I’ve not been so on the ball recently just due to high workload and twice my card declined due to insufficient funds. I had the funds in another account, but forgot to transfer them. This would act as a good safety net.

surreysaver said:

It won't do any harm; in fact, if you stay within the overdraft limit, it will look good on your credit history when you come to apply for other products in the future such as credit cards or mortgages.
If its interest free, you can transfer the interest free limit to a savings account and earn interest (commonly known as Stoozing)

That’s good to know - thank you. I already have £50 IF OD with Lloyds, and I use that for the reimbursed fee. Not sure if that ever registers as being in OD though as the fee goes out and is waived so close together normally.

I’d considered doing stoozing before, but wouldn’t this be bad for the credit report? Looks like I really need it, and am in persistent debt. Though it may be standard among students, I’m trying to build an exemplary report.

I think it depends on what you're planning to apply for. If you're likely to be an applying for a mortgage in the next year or so, then I would not do it. If you're not planning on taking on any major credit committments it probably won't make any difference. 

Only would be credit cards in the next couple of years really. Chase, if that ever comes out, Barclaycard rewards card when I’m eligible etc. Don’t want to apply for too many, but I’m not eligible for the ‘greats’ yet

If you're a student, I think low income is likely to be a bigger blocker to obtaining a (non-student) credit card - e.g. Barclaycard Rewards requires a minimum income of £20k. 

Goodness me! Thanks for pointing that out, I’d never scrolled down below the you must be over 21 bit as that made me ineligible - suppose that’ll pretty much be graduation anyway, so a graduate job should qualify me. Though may as well go for AMEX.