Clearing a couple of overdrafts

Tute

Tute

Tute

Soldato
Joined
24 Jul 2004
Posts
22,593
Location
Devon, UK
Hey all, looking for some bank related advice.

I've got a couple of student overdrafts at two different banks and i'm looking to start clearing them as it's my final year and I don't want them there when I graduate (I assume you have to start paying interest when you're no longer a student?).

Anyway at the moment I have a 24hr/week part time job which goes into one of the two accounts. The trouble with this is that i'm struggling to save any as the overdraft swallows it up completely, and i'm just running it up to the limit again.

I thought the best way would be to open up another current account, no overdraft, credit card, nothing except a debit card (I NEED this for online purchases) and use that, transferring something around £50-£100 a month into each account to start getting rid.

The overdrafts are £1250 and £1750 (the latter being my account I use daily).

What do people here suggest? Is my idea a good one? If so, what bank do people recommend for simple current account with good internet banking, service, and a visa/switch debit card?

I've had a quick look through the other thread, I see First Direct are recommended a lot, however i'm put off by this "charge". What's that all about? :confused:

TIA :)
 
The way im paying off my £1800 student account overdraft is by setting up a monthly standing order (a Day after my pay goes into it) from my Barclays current acccount (Which is the one with the overdraft) for £300 into my Halifax ISA. The plan is then to pay off the overdraft in one go once ive got enough. Also I make more interest on my ISA than I pay on the overdraft, so its in my benefit to drag it out as long as possible.
 
i'm with natwest - interest free overdraft grad account after i completed uni :D cant go wrong..

also, i briefly read what you said - opening another account to help clear another account? i cant see how that works. its not gonna help you save/gain money.. so i wouldnt go for it..
 
If your overdraft is just going straight back up to its limit without reducing each month it is suggesting that you are currently spending everything that you are earning and starting with another account isn't really going to help.

You need to work out exactly where the money is going and then work out how to reduce this so that there is something left at the end of each month which can then be used to reduce the overdraft.
 
What you pay interest on halves every year after you graduate with most banks.

With Natwest for example, a graduate is entitled to £2000 interest free overdraft for the first year after he/she graduated, £1000 in the second year, £500 in the third and finally £0 in the fourth. So technically you don't need to start paying part of it back until Summer 2009 (because you graduate in 2008 Tute).

^ I actually called Natwest today to get my overdraft increased to £1800 as I was going to my fourth year, and that information I have provided above is what I was told at 10am this morning, so it is fairly up to date :)

Other banks may vary, but I don't think any of them start charging interest on the full amount straight away :)
 
Thanks for all the replies, I thought maybe they wouldn't just start hammering interest on as soon as I graduated, but then again these are banks! :p

I DO want to get this cleared though. I hate having it, and whilst I could start when I graduate, I feel i'm financially able to start removing it now (with some cutting down on "luxuries").

As for the "other account" idea, well I find it easier to organise my account this way, rather than use the account where all the debt is built up. It's quite hard to explain why really, I guess i'm just odd? :o
 
Tute said:
Thanks for all the replies, I thought maybe they wouldn't just start hammering interest on as soon as I graduated, but then again these are banks! :p

I DO want to get this cleared though. I hate having it, and whilst I could start when I graduate, I feel i'm financially able to start removing it now (with some cutting down on "luxuries").

As for the "other account" idea, well I find it easier to organise my account this way, rather than use the account where all the debt is built up. It's quite hard to explain why really, I guess i'm just odd? :o
Click to expand...

Most major banks (I know Natwest and Barclays do), have e-savings account, which you do not get a card or cheque book for.

I have student accounts at both Natwest and Barclays, and have e-savings accounts at both banks. I do not spend the £1000 overdraft I have with Barclays, but transfer it to their e-savings account using online banking - basically I make money through interest by using their money.

With Natwest I do something similar, but this time I use my account and spend the money. All my income and expenditure come in and out of my Natwest student account, and I put the bulk of the available money in the Natwest e-savings account. Again I use online banking to transfer money into my student account if and when needed, and always keep a minimum of £50 in there for emergencies.

Online banking within the same bank is great as transfers are interest. I find this way maximises the interest I earn, and allows me immediate access to my money (even if you can't get online whilst on a mass spending spree, a 10 minute phone call allows you to transfer the funds between the accounts at each bank)

:)
 
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