Results are out! Find what you need...fast. Get quick advice or join the chat
Hey there Sign in to join this conversationNew here? Join for free

Student Account overdraft->savings - Will this affect your credit rating?

Announcements Posted on
    • Thread Starter
    • 0 followers
    Offline

    ReputationRep:
    Hi all,

    So I've heard about people taking their 0% interest overdrafts, and depositing it in a quick access savings account. This sounds like a great way to work the system, but I've read mixed information on one question from this forum and the internet in general:

    Will keeping your student account in the red permanently affect your credit rating?

    Some have said it'll benefit it, due to you appearing to constantly be in credit and handling it, while others have said that it'll look like you're financially insecure. So I'm really quite unsure

    Cheers in advance,
    JB
    • 2 followers
    Offline

    ReputationRep:
    With the student account overdraft, most banks have a "condition" whereby you need to deposit so-and-so amount every so often.
    For example, Natwest have said that i need to deposit £750 every 3 months.

    If these conditions aren't met then they are likely to close off your account. (by this i assumed close = change from student to current account) I've recieved letters and then paid the money and they've not done anything, but some banks may expect you to do it without reminders and instantly close your account.

    Some people are safe from this because of the fact that they use it for their Student Finance to be paid into, and so this money automatically gets paid in.

    I was always under the assumption that if the student account gets changed from a student account to a current account then anything in the overdraft needs to be paid otherwise it will start affecting your crredit rating.
    • Thread Starter
    • 0 followers
    Offline

    ReputationRep:
    (Original post by elldeegee)
    With the student account overdraft, most banks have a "condition" whereby you need to deposit so-and-so amount every so often.
    For example, Natwest have said that i need to deposit £750 every 3 months.

    If these conditions aren't met then they are likely to close off your account. (by this i assumed close = change from student to current account) I've recieved letters and then paid the money and they've not done anything, but some banks may expect you to do it without reminders and instantly close your account.

    Some people are safe from this because of the fact that they use it for their Student Finance to be paid into, and so this money automatically gets paid in.

    I was always under the assumption that if the student account gets changed from a student account to a current account then anything in the overdraft needs to be paid otherwise it will start affecting your crredit rating.
    Fair enough, I've heard of such account conditions. I meant to ask whether constantly running on overdraft, within your account's limit, would be 'reported' to anyone, as long as you followed the rules and conditions. Does it vary from bank to bank? I'd rather not have a marred 'rating' of some kind just because I used my overdraft to generate some savings interest. And ... I'd rather not ask banks whether living off overdraft is possible; it sounds like the kind of thing that wouldn't help their confidence in me
    • 5 followers
    Offline

    ReputationRep:
    how do you make money off your overdraft anyways?
    • Thread Starter
    • 0 followers
    Offline

    ReputationRep:
    Apparently some people take their overdraft minus 20 quid, and put it all in a high-interest savings account.
    • 3 followers
    Offline

    ReputationRep:
    Nothing wrong with it really.

    Credit ratings aren't universal, but your credit report is. Your credit report will show both your overdraft limit and how much of it you've used, and it should be automatically updated regularly (monthly/quarterly).

    However, how a potential lender views this is another thing. One creditor may like to see a bill being paid off in full or not used at all every month to see that somebody's reliable; whilst another will want to see money being used but not paid off in full, because interest is how creditors make money!

    I would imagine that most lenders wouldn't bat an eyelid at your overdraft, because they'll know it's a student overdraft and that it was 0% interest.

    Just, as has been said, be careful of any account requirements on student accounts like minimum deposits or transactions. Also read the Ts&Cs to make sure that having that student account/overdraft doesn't conflict with another account (e.g. if you already have a student account, you normally can't open another with another bank!)
    • 1 follower
    Offline

    ReputationRep:
    Your credit rating is about how well you've stuck to repayment terms. Your rating goes down if you don't make a repayment that you signed up for. An overdraft is not required to be paid off at any particular time, and staying in the red will not generally adversely affect your credit rating. The bank is entitled to call in the overdraft at any time, and your credit record would be affected if you didn't repay it on request, but in practice they don't do that!
    • 2 followers
    Offline

    ReputationRep:
    its your overdraft, and as long as your sticking to your rules and conditions of the account then you can use it how you will. Especially 3rd year when im some accounts you can get a massive overdraft!

Reply

Submit reply

Register

Thanks for posting! You just need to create an account in order to submit the post
  1. this can't be left blank
    that username has been taken, please choose another Forgotten your password?
  2. this can't be left blank
    this email is already registered. Forgotten your password?
  3. this can't be left blank

    6 characters or longer with both numbers and letters is safer

  4. this can't be left empty
    your full birthday is required
  1. By joining you agree to our Ts and Cs, privacy policy and site rules

  2. Slide to join now Processing…

Updated: June 24, 2012
New on TSR

Strictly iPlayer

Will you still watch if some BBC programmes go online only?

Article updates
Reputation gems:
You get these gems as you gain rep from other members for making good contributions and giving helpful advice.