How do overdrafts work?

Question

I have a student account, with £500 overdraft which is also interest free.

Do this mean i wont be charged when i make a purchase or payment?

And since its 'interest free' does this mean I dont have to pay it back soon, but rather when im ready?

Answer 1

As Voda, it basically means that you can spend £500 that you haven't got, the bank won't ask for any or all of it back as long as you have the facility.

For example, if your account is £200 in credit, you effectively have £700 available to spend.

Answer 2

It more or less means that you can spend £500 that you don't have then at the end of your course you pay back £500 or however much of it you used

Answer 3

You are right as long as you do not go over limit

Check with your personal advisor at bank though to amke sure

Answer 4

you can borrow £500 with out paying interest on it, but if you go over £500 you will be hammered by interest so be careful all that glitters is not gold

Answer 5

If you make a purchase and you don't have enough funds to cover it, your bank will cover you up to 500 dollars. Your account will be negative at this point, and you most likely will be charged non-sufficient charges as well.  But, at least you wont be charged interest on the overdraft amount.  You will still need to repay the overdraft amount in thirty days or your bank could close the account for non-sufficient charges and report you to Chexsystems.

Answer 6

It all depends on the place you took the lone out. Phone them and find out. Every account is different.

Answer 7

u have to ask ur back what the period is for interest free.

Answer 8

no interest means you only pay back what you borrowed nothing on top.