Student overdraft

I recently opened a student bank account at nationwide and was wondering how you pay back overdrafts. Does it automatically take money out of your account when you deposit money into it or do you have to pay for it separately ?

Reply 1

Surnia

An overdraft is part of your main account, so if you use it, any further deposits into your account cover the overdraft.

For example: your overdraft is £1000. You've got £2000 in your account, but you spend £2700; you've spent all your credit and used £700 of your overdraft so your account balance is now -£700.

The next sum of money that goes into your account is £3000. You'll see your account is £2300 in credit because you were at -£700.

An overdraft is there as a safety net if you need to spend beyond what you have available. You can be charged if you go beyond the agreed overdraft limit and the bank can demand you pay off an overdraft at any time, so use it wisely; don't see it as an extra amount of cash that's available to you every term.