NatWest student overdraft

As above, the overdraft remains in place, you just start getting charged interest on it each month after you pass a set amount of time. I don't think the interest rates were that bad as I recall but I know a lot of banks raised them a couple years ago so not too sure what they're like now.

Reply 3

PixiePresents

OP

14

Original post by artful_lounger

As above, the overdraft remains in place, you just start getting charged interest on it each month after you pass a set amount of time. I don't think the interest rates were that bad as I recall but I know a lot of banks raised them a couple years ago so not too sure what they're like now.

Could I just pay my overdraft back and remove it from my account by the time they start charging interest on it? I don’t fully understand how overdrafts work quite yet tbh, how do I go about paying it back?

Reply 4

Original post by PixiePresents

Could I just pay my overdraft back and remove it from my account by the time they start charging interest on it? I don’t fully understand how overdrafts work quite yet tbh, how do I go about paying it back?

I mean if you aren't in your overdraft you should be able to ask to have it removed at any time. To "pay it back" you just have enough money in your account that your account is fully in the positive and not in the negative (overdraft).

It's useful to maintain though as the interest costs weren't that much for me and it's convenient to have as a buffer in case you have some larger costs temporarily (e.g. moving or something). As long as you pay it back in before the end of the interest period (usually one month I think) you don't get charged interest anyway.

With planning it can be a useful way to buffer costs temporarily and not incur any charges :smile:

The important thing is to just try and avoid thinking of it as an extension of your account while you are a student and have it interest free (which is easy to do!) as you might end up using and relying on it more than necessary which could be a shock if you want to limit usage after graduating!

(edited 8 months ago)

Reply 5

PixiePresents

OP

14

Original post by normaw

Quoted from NatWest's website:

If you hold a Student account and are graduating this year, we will be in touch to let you know we will be moving you onto a Graduate account in July/August. Your account number, sort code and debit card will stay the same.

Your overdraft limit will stay the same for another year. You won’t pay interest on an arranged overdraft up to £2,000 for the next 12 months.

In your second year on the graduate account, the terms of your overdraft will change and the interest free buffer will reduce to £1,000.

After two years, we’ll move you to a Select account. Your existing overdraft limit will stay the same, but it won’t be interest-free. We’ll be in touch again next year to remind you about the changes to your overdraft.

If we wrote to you in October 2019 about moving your Student or Graduate account to a Select account, this move will take place later this year and again we will be in touch closer to the time.

Thank you!

Reply 6

PixiePresents

OP

14

Original post by artful_lounger

I mean if you aren't in your overdraft you should be able to ask to have it removed at any time. To "pay it back" you just have enough money in your account that your account is fully in the positive and not in the negative (overdraft).

It's useful to maintain though as the interest costs weren't that much for me and it's convenient to have as a buffer in case you have some larger costs temporarily (e.g. moving or something). As long as you pay it back in before the end of the interest period (usually one month I think) you don't get charged interest anyway.

With planning it can be a useful way to buffer costs temporarily and not incur any charges :smile:

The important thing is to just try and avoid thinking of it as an extension of your account while you are a student and have it interest free (which is easy to do!) as you might end up using and relying on it more than necessary which could be a shock if you want to limit usage after graduating!

Thank you so much! See managing finances is so new to me and there’s a lot to factor, trying to get everything in place before uni starts!

Reply 7

Original post by PixiePresents

Thank you so much! See managing finances is so new to me and there’s a lot to factor, trying to get everything in place before uni starts!

Yeah, that's expected :smile:

As long as you are thinking about these things, that is usually the first step! It's easy to just go in and spend without thinking too much of it (especially after you get your first loan disbursement and suddenly have quite a lot of money in your account!), but as long as you are mindful of what you're spending and keep an eye on things you can usually avoid any major pitfalls that way I think. Planning a (rough) budget also helps a lot too!

Something I found which helped me a lot when I was first going to uni was also mainly focusing on using cash, rather than card, to pay for things. Meant I was much less likely to buy stuff online (as I always thought twice before using my card) and using cash instead of contactless lets you keep track of your spending much more easily (there's also a psychological element where handing over the money makes it feel much more like parting with it than just swiping your card!).

You can also potentially set quite firm budgets for yourself that way - for example only withdrawing X amount each week in cash from the ATM and that being all your money for spending/transport/food etc, for that week. This helps you moderate routine spending quite well, while ensuring you have enough for those unexpected costs that sometimes arise :redface:

(edited 8 months ago)

Reply 8

martin7

20

Original post by artful_lounger

I don't think the interest rates were that bad as I recall but I know a lot of banks raised them a couple years ago so not too sure what they're like now.

35-40% per annum is (sadly) now typical for overdrafts.

Reply 9

martin7

20

Original post by artful_lounger

I mean if you aren't in your overdraft you should be able to ask to have it removed at any time. To "pay it back" you just have enough money in your account that your account is fully in the positive and not in the negative (overdraft).

It's useful to maintain though as the interest costs weren't that much for me and it's convenient to have as a buffer in case you have some larger costs temporarily (e.g. moving or something). As long as you pay it back in before the end of the interest period (usually one month I think) you don't get charged interest anyway.

I think you're confusing this with credit cards.

With a credit card you don't pay interest providing you pay your monthly statement on time and in full.

With an overdraft, you are charged interest each day the account is overdrawn. (Sometimes there's a nominal amount on which interest isn't charged, but that might only be £10.)

Reply 10