Biggest 0% Overdraft Student Accounts 2012/13

You should be very careful when taking out a student bank account, especially if the 0% overdraft is something that you plan on making full use of.

Remember that some banks offer GUARANTEED overdrafts of X amount – whilst other banks only offer “up to” X amount. The meanings of these two phrases are totally different.

What does guaranteed mean?

With a guaranteed figure, it means you’ll get it no matter what happens – providing you meet any basic terms they put in place like paying X amount of money into your account over a set period. Guaranteed overdrafts mean you won’t get a nasty shock when you walk into the bank and try to up your limit. With a guaranteed overdraft you know exactly what you’re getting, and you can afford to rest easy at night.

What does “up to” mean?

“Up to” means that you COULD be lent up to the amount the bank specifies. The fact is that most applicants probably won’t be given the full amount – and you could be one of those people. If you’re expecting an overdraft of £3,000, but you’re only given £500, it can leave you with a real head ache. It’s important that you take the time to establish whether the overdraft facility on your account is guaranteed or up to.

Top 0% Guaranteed Overdraft Accounts:

Here are the top banks for 0% guaranteed overdrafts:

  • The Co-operative: a limit of £2,000 by your third year is guaranteed. The only stipulations are that you pay £300 into your account when you open it, and that your account usage is satisfactory throughout your time at university.
  • Natwest: they offer a guaranteed overdraft of up to £1,500 in your third year – as well as other perks such as a railcard.
  • The Royal Bank of Scotland: like Natwest they too offer a guaranteed 0% overdraft of up to £1,500 in your third year. It’s tiered too, with £1,000 available in your first year, and £1,250 in your second year.

Now you’ve seen these overdrafts you might be thinking that they’re not particularly high compared to other products on the market. Let’s take a look at HSBC for example:

  • HSBC: they offer an overdraft of UP TO £3,000. Whilst the overdraft facility looks much more inviting, the fact is that it’s only “up to” £3,000 – and there’s a very good chance you won’t be approved for the full amount.

Be smart when shopping for overdrafts

An overdraft is a form of borrowing, and as such it’s your duty to pay that money back. Plenty of students go to uni and spend their overdraft like it’s free money. Whilst it is essentially “free” during your time studying, you will have to pay the sum back. If you’re not lucky enough to find a 0% overdraft deal once you graduate you’ll have to pay interest on your overdraft – which can make it a very expensive borrowing option indeed

There’s no shame using an overdraft – even the best of us have to dip into an overdraft from time to time. The trick is not to get lulled into a false sense of security. Don’t go out spending cash like it’s going out of fashion, because paying back your debts is harder than it might seem, especially if job offers aren’t forthcoming once you graduate.

Those people out shopping for a student bank account should always go for the account that offers the biggest 0% overdraft facility just in case they need it – but remember not to fall for an “up to” overdraft – which could leave you high and dry if the limit is too low.