How do I use an arranged overdraft? 10 points

Question

I have just upgraded my account to a student account as I am starting uni in September. However, there is an overdraft facility for which arranged overdrafts are interest free and I was wondering how I would use this ( i.e. Phone the bank to arrange me taking it out, use the cashpoint etc )

Answer 1

The clue is "arranged".  You need to ask them.  If they agree, you can take it any way you wish.

Answer 2

Using an overdraft is basically just like using the money if it was your own, you take it out at cash points or you can pay for things with your debit card. So if you had a £500 overdraft and you already had £200 in there you could use £700 in what ever way you like. Though overdrafts are the cheapest way to borrow as soon as you start spending it you get yourself into a steep hole that you will probably still have way into your working life. Remember that you still have to pay the money back at some point!

Answer 3

You need to talk with your bank, they are quite good at handing out overdrafts, but just be care full Remember, if you keep using it, you have to keep paying it back!

Just call your bank, or go into your bank.

Answer 4

You need to speak to your bank, any branch convenient to you will do.

Your banking advisor will discuss your requirements with you and tell you if they are going to allow you an overdraft facility and how much you can have.

Once they have given you a figure, they will also tell you when the facility will be available, usually within a day or two.

When you have a "free" overdraft as a student it is important not to abuse your bank account in any way because, if you do, they will withdraw the facility and you will have to pay it back immediately or start paying interest and penalties on it.

Once you have been told your overdraft limit and it has become available you may allow your account to be overdrawn up to, but not more than, that limit. You don't have to contact the bank each time you are going overdrawn (unless they put special conditions on your account). Use the overdraft as a buffer, it can be accessed in any way you normally withdraw money from your account (cash, cashpoint, cheque, direct debit, standing order etc.).

Your overdraft must always be considered the bank's money. It is a loan to you that they can withdraw at any time. When you stop being a student, they will start charging you interest on your overdraft after allowing you a short time (up to a year) to start earning money.

Good luck at university. Take full advantage of all the opportunities available to you there.

If I have not completely answered your question, please e-mail me for clarification of anything you're not happy with.

Answer 5

Why in the world would you want to go into overdraft? Look up what it means first.

Here's an quick example: You have $500 in checking account. You buy a $1,200 laptop. You are now at a balance of -$700. This is your overdraft.

Sure, it's no interest but two rules apply in WAMU and Bank of America:

1. You must pay the $700 back by two weeks or else your account gets closed. Then at four weeks, they send creditors and collections agencies to your house.

2. Every time you go into a negative balance, you gain overdraft hits on your credit report. This is minor compared to you getting hit with a "forced account close due to nonpayment" on your credit rating. And you loose MAJOR points if a collection agency has to go to your house.

Trust me.. you want a good credit score. You do want to own a house one day don't you? If you're a gold digger, your bad credit score can make creditors say no to your husband (even if he has perfect score) simply because of YOUR score.

Answer 6

As long as the bank has authorised the amount of overdraft you can think of it as an emergency fund and access it exactly the same way as your current account. Unlike some of the answers I think it's good to have access to an "emergency" fund as long as you remember that its a loan and needs to be paid back.

Answer 7

You basically call the bank and ask them if you can have it enabled which they will probably do as they make money off it. There will most likely be an admin charge and a monthly charge even it it is interest free.

Just be careful, it can be difficult to get out of an overdraft situation as you tend to stay in the red once you're in it. Ideally it should only be used for emergencies and if you know you've got some money coming soon to revover you out of it.

Answer 8

Overdrafts are a viscous circle don't use unless its absolutely necessary