How often do you go into your overdraft?

As the title says how often do you go into your overdraft? Is this because of reckless spending or just the high costs of living as a student? Do students find that they become dependent on the financial 'safety' an overdraft provides?

Would it possible to never need a large overdraft while at university if you manage your money well, or is an overdraft a vital necessity for the majority of students?

I'm asking this as I currently do not have a student bank account which offers a large overdraft (e.g. £1500 or more), and am wondering if it's really necessary for when I start university. Sorry for asking so many questions :colondollar:

Thanks.

Reply 1

fallen_acorns

20

more accurate question for me - would be how often I get out of my overdraft! :redface:

(not often...)

As for why, id rather not be in it - but ive had to do my degree under pretty unusual/difficult circumstances, where constant/regular employment hasnt been an option.. - I get minimal loan, and my parents will not contribute (and I wouldnt want them to) - so the money has to come from somewhere... and thats what my overdraft has been for..

All worked out though - heading into my final year, and have a reasonable job lined up for this year, - so il gradually pay my way out of it, through the year, untill I finish overdraft free :smile:

Reply 2

Chihiro94

1

I'm in it atm. It depends on cirumstances. The way accommodation seems to work round here is that anything non student requires a 12 month lease so I'm currently using it to cover rent and bills until my loan comes in.

I'd recommend sitting down and thoroughly budgeting, taking into account all your incomes and any expenditures. Research you area, what kind of things you'd have to do second year etc.. I didn't realise you could only really get 12 month contracts so didn't budget it last year hence the overdraft, but I have budgeted it to be paid off with next years finance.

Personally I'd say yes as it's good to know if you have any bills/rent going out of the account that you'd be covered. You shouldn't have to stay in or use if your careful enough though.

Reply 3

SBUX-Barista

Never EVER go into my overdraft (even though my bank literally forced a £100 overdraft facility on me).
Firstly, it's costly. Secondly, it's not the only way of borrowing money. Get a credit card, for God's sake. Overdrafts are obsolete.

Reply 4

AccountingBabe

16

Original post by SBUX-Barista

Never EVER go into my overdraft (even though my bank literally forced a £100 overdraft facility on me).
Firstly, it's costly. Secondly, it's not the only way of borrowing money. Get a credit card, for God's sake. Overdrafts are obsolete.

You do realise student overdrafts are usually at 0% interest, meaning a "free" loan of money for the time you are in university? Credit cards don't usually offer this type of deal...

Reply 5

tania<3

15

Original post by SBUX-Barista

Never EVER go into my overdraft (even though my bank literally forced a £100 overdraft facility on me).
Firstly, it's costly. Secondly, it's not the only way of borrowing money. Get a credit card, for God's sake. Overdrafts are obsolete.

Not all of us want the financial risk of using credit cards. Why shouldn't we use a student overdraft if we can manage it properly? It's not costly at all, all student overdrafts are interest-free... Mine is currently capped at £1000 but I've never had to go that far into it anyways, the most I've ever been is £500 and that is right now, because of next year accommodation deposits etc.

Reply 6

willp93

8

You won't go into it ever if you spend wisely. Only my friends that go out every night and spend loads on drink have gone into theres!

Reply 7

SBUX-Barista

Original post by AccountingBabe

You do realise student overdrafts are usually at 0% interest, meaning a "free" loan of money for the time you are in university? Credit cards don't usually offer this type of deal...

Seriously? I'm banking with Barclays atm, and I'm 100% sure their overdraft is by no means interest free.
However, for my barclaycard, it's 14-month 0% interest on purchases. So I'm content this way, should I need to borrow some money.

Reply 8

jelly1000

21

Original post by willp93

You won't go into it ever if you spend wisely. Only my friends that go out every night and spend loads on drink have gone into theres!

depends on how much you get in loan, if your parents give you any money and if you have a job. say you can't get a job and your parents dont give you any money, if you get the minimum loan- £3500 ish and your rent is £4000 a year no ammount of careful spending would keep you out of it

Reply 9

SBUX-Barista

Original post by tania<3

Not all of us want the financial risk of using credit cards. Why shouldn't we use a student overdraft if we can manage it properly? It's not costly at all, all student overdrafts are interest-free... Mine is currently capped at £1000 but I've never had to go that far into it anyways, the most I've ever been is £500 and that is right now, because of next year accommodation deposits etc.

Don't credit cards and overdrafts carry the same degree of financial risk, i.e. we will all have to pay it back eventually?

Reply 10

willp93

8

Original post by jelly1000

depends on how much you get in loan, if your parents give you any money and if you have a job. say you can't get a job and your parents dont give you any money, if you get the minimum loan- £3500 ish and your rent is £4000 a year no ammount of careful spending would keep you out of it

Ah true, didn't think of that. If you get the full amount of loan/grant you should be fine with careful spending then!

Reply 11

DMAQ

So far I've managed to stick to my budget and not venture into my overdraft but perhaps one day it'll be required.

Reply 12

jelly1000

21

Original post by A. Jensen

As the title says how often do you go into your overdraft? Is this because of reckless spending or just the high costs of living as a student? Do students find that they become dependent on the financial 'safety' an overdraft provides?

Would it possible to never need a large overdraft while at university if you manage your money well, or is an overdraft a vital necessity for the majority of students?

I'm asking this as I currently do not have a student bank account which offers a large overdraft (e.g. £1500 or more), and am wondering if it's really necessary for when I start university. Sorry for asking so many questions :colondollar:

Thanks.

Whether your likely to go into your overdraft or not depends on not only how much you spend but how much you get in student loan and what other income you have. Students who get the minimum loan of £3500 ish a year are more likely to be in it constantly because that very often doesn't cover a years rent let alone food and any social costs. If you get £5000 or more from student finance you should be fine for most of the year at least provided you budget and your accomodation isn't too expensive (i.e. 4k or less). If your parents give you money and or you have a part time job your also less likely to be in it as well due to this extra income.

I went into it once last summer because my 12 month house contract had started in July and it stated in my contract that I needed to make 2 payments of £900 each (one in July for three months rent and one in September for three months rent) before my first semester student loan payment. I later found out though through my other housemates that my landlord didn't mind waiting until after our student loans came in for the September payment (as our term also started in September) but regardless I still needed £900 for the July payment and student finance only give you around £300 for summer which many students with lower loans spend at uni after Easter.

whats an overdraft??

Original post by SBUX-Barista

Seriously? I'm banking with Barclays atm, and I'm 100% sure their overdraft is by no means interest free.
However, for my barclaycard, it's 14-month 0% interest on purchases. So I'm content this way, should I need to borrow some money.

You need to open a student account with them to get the interest free overdraft.

Barclay's offer students : Up to £2,000 – 0% interest pa (variable) on their overdraft.

Reply 15

jelly1000

21

Original post by willp93

Ah true, didn't think of that. If you get the full amount of loan/grant you should be fine with careful spending then!

oh definitley with the full ammount. I don't spend as much as those getting the full ammount of student finance and I don't have a strict budget, although I don't go out clubbing much either.

Reply 16

AccountingBabe

16

Original post by SBUX-Barista

Don't credit cards and overdrafts carry the same degree of financial risk, i.e. we will all have to pay it back eventually?

Yes, but you are more likely to pay interest at some point on a credit card, with your overdraft you could get as much as £3000 limit to spend and not have to pay any interest at all.

Reply 17

alexmagpie

15

Original post by SBUX-Barista

Seriously? I'm banking with Barclays atm, and I'm 100% sure their overdraft is by no means interest free.
However, for my barclaycard, it's 14-month 0% interest on purchases. So I'm content this way, should I need to borrow some money.

I imagine you don't have a student account? Also, I don't think many students would be approved for a 0% interest credit card. Student overdrafts are by far the best way to borrow money when you likely have a non existent credit score!

As to the OP, I'm about £100 overdrawn at the moment, because due to the nature of my job, I didn't earn very much last term! Also, I find that in the summer holidays I will go overdrawn, but am able to save a bit extra to pay it off during first term with no problems. Overdrafts are really useful if you have a landlord like mine, who wanted over £1000 in rent before our loans were in!

I also have some money in a savings account which I could easily transfer to pay it off, but it's earning more interest where it is, so I might as well leave it!