Whether you’re paying rent for your student digs or need to purchase some extra uni supplies, your student overdraft can provide a helping hand if you’re low on funds. But before you start spending, it’s important to get to grips with everything your student overdraft entails.
What is a student overdraft?
An overdraft is where you can spend more than what’s in your current account. This will be up to a set amount and you may be charged interest for using it. Student overdrafts work in the same way, but are usually interest-free. If you’re unsure, it’s worth checking if you’ll be charged interest on using your student overdraft with your bank.
Explore more: Student banking: what do you need to know?
How much can you borrow on your student overdraft?
The amount you’ll be able to borrow will depend on who you bank with and your financial circumstances. Some banks may let you have up to £3,000 on your student overdraft, while others may set a lower limit.1 Again, if you’re unsure about your student overdraft limit, contact your bank.
How to get a student overdraft
To get a student overdraft, you’ll need to apply for a student current account. You’ll usually need to show your proof of acceptance onto a qualifying course, as well as your ID and proof of your address. Some banks may also have other criteria to be able to apply, so it’s worth checking with them first.
You may find some student bank accounts come with other introductory offers which you can make the most of when opening an account. However, while introductory offers can be great, it’s important to make sure the account is going to be right for you over the long term.
Can you increase your student overdraft?
You may be able to extend your student overdraft limit after a certain period of time. This will depend on your bank and they may take into consideration the way you’ve used the account.
Should you increase your student overdraft?
The important thing to remember when it comes to your student overdraft is that you’ll need to pay back anything you borrow. If you need the extra funds and you’re comfortable you can repay, then increasing your overdraft may be helpful.
Keep in mind, when you’re no longer a student you may incur interest if you still owe money on your overdraft. Also, extending your overdraft limit if you don’t need it may just increase the temptation to spend.
Explore more: Borrowing money as a student
How do you know if you're nearing the limit of your overdraft?
To make sure you’re not overspending on your student overdraft, you’ll need to be aware of your incomings and outgoings. There are apps which can help you monitor this. Check if your bank offers text alerts that send you a message if your balance drops below a certain point.
What should you do if your degree is longer than 3 years?
Make sure your bank knows when you’re graduating. This is especially important if you’ve extended your time studying through a change of course, or by repeating a year. If you don’t, your student account may be changed to a graduate account and you may be charged interest.
What happens to your student overdraft when you graduate?
If your degree is coming to an end, you may want to look at switching your student account. Some graduate accounts charge 0% interest on overdrafts for a fixed period of time, but always check this before you switch.
If you’re wanting to close your student account, you’ll need to have paid back your student overdraft.
Explore more: How to repay debt
This article provides general information and does not take into account the financial situation of the reader. For this reason it must not be relied on as financial advice. All accounts are subject to terms and conditions.