student bank accounts and overdraft

[kasavien]

Hi all

I was wondering if someone can answer this for me. I have a student bank account and i'm pretty much at the overdraft limit and i have been for a while BUT i have the money to pay it off sat in another account with another bank gaining interest and i intend to pay it off straight away when i graduate. One other thing i will need to use the money in the savings account to pay my next rent installment before the student loan comes in after easter. The problem is i had a phone call from my bank saying that i should put money into the overdraft account at least every 90 days, is there anything they can do if i don't do this, for example will it affect my credit rating, which is the impression i got from the phone call.

Thanks

Andy

[Funkstar]

It may well effect your credit rating. There will be terms and conditions of use on the student account and the overdraft. Usually there is a minimum value of transactions that need to go through the account in a month. You aren't supposed to use them the way you have, it is a current account after all.

There isn't anything stopping you using it like you are, you just need to put some money in it, then spend that money as well.

[tiggerai]

Just put £10 in the other account and transfer it back again.

Usually the student loan payment should go into that current account too. Which would solve the problem I think.

[arthurleung]

When I just had the current account I go right down to -1500, then when I use it I put in money from my (high-interest) saving account, so it is always at about the same level. My bank (Halifax) never asked me to put money, but even offer me more overdrafts!

[SiM]

When I just had the current account I go right down to -1500, then when I use it I put in money from my (high-interest) saving account, so it is always at about the same level. My bank (Halifax) never asked me to put money, but even offer me more overdrafts!

Same for me with Natwest... and I think my credit rating has been going up as my credit card limits are increasing

[kasavien]

Ok thanks guys, i'll start putting a bit of money in, shouldn't be a problem, i just prefer to keep all my money in one place to make it easier to manage and keep track of things.

[SiM]

I would advise you guys to get a credit card too (I have 3)... Use it a little each month and pay it off in full... Then you will have a good credit rating by the time you graduate
Be careful not to go crazy with spending money on it though - I accidentally have spent a few thousand on it over the last 3 years!

[kasavien]

lol! I have a credit card too, but tend not to use it because i prefer using my debit card, maybe i should start using it

[Marcos]

I ended up falling back heavily on my CC in the first year, im glad i had it though, just have to be good about paying it back.

[kidzer]

This credit rating jazz - whats it all about?

I could quite easily switch to buying stuff online with a credit card I have (and have never used) and pay it off with money from my current account if it'll up this 'rating' - I'm just not sure what it is.

*wanders off to google...*

[SiM]

This credit rating jazz - whats it all about?

I could quite easily switch to buying stuff online with a credit card I have (and have never used) and pay it off with money from my current account if it'll up this 'rating' - I'm just not sure what it is.

*wanders off to google...*

I'm sure you already found this, but for other readers this is a good article:
Your Credit Rating: How it works and how to improve it...

Credit scoring tries to predict your behaviour. As if you've no credit history it's more difficult for lenders to do this, you're more likely to be rejected.

If you can't get credit, sadly the solution is apply for hideous 30%-ish rate credit cards offered by the likes of Monument, the Associates, Barclaycard and Capital One – who offer special ‘high-risk' cards alongside their normal ones.

Use these for 6 months to a year, spending a little every month but strictly repay in full, so there's no interest cost. After that you should've built a credit history allowing you to move into the mainstream. This tactic is also useful for those who've defaulted in the past.

[Spud1]

Which bank are you with kasavien? That sort of "pay money in every 90 days" sounds like a HSBC trick to me.

Most banks don't have this sort of term on student accounts - you are pretty much expected to be living out of your overdraft if you dont have a part time job while being a student, and as long as your student loan is paid directly into that account its not usually a problem. Amost everyone I knew at uni lived out of their overdraft, and most didn't pay a penny in other than student loans.

As has been said though if they are getting arsey about it just pay in £10 from your savings, job done.

Using your credit card is great advice too - as long as you can manage your money effectivly. Make sure you pay it off in full every single month, and don't spend more than you have in your bank..else the charges will rack up quickly. Using a credit card has many advantanges - it gains you more interest on your savings (its in your bank for longer each month), and you get protection when shopping online against fraud etc - something which you don't get with a debit card.

The trick is to keep an eye on your spending - get into the habit of using your online banking regularly, and if you have the patience its a really good idea to reconcile this against all your reciepts each week to keep a track of how much your spending. Its a PITA to do, but can save you thousands.