Student Overdraft Facility - No Charge


(James Prince) #1

Monzo, in order to attract the younger generation to completely switch accounts from your traditional Barclays, HSBC etc will have to offer free overdraft facilities for students up to £3,000.

Which they will then be put on a specific Graduate account plan once they graduate in order to pay the overdraft facility back.

What do people think?


If you haven't moved over, what's stopping you from making Monzo your main bank?
#2

I think exactly that process lead me into the use of an overdraft that I struggled to repay for well over 10 years, all the while forking out overdraft charges and interest to the bank.

Student overdrafts are an invitation to mounting debt, packaged up as a friendly and cuddly helping hand. After your first 3/4 years of being offered credit, being allowed to build up a £3000 overdraft then being told to repay it, is criminal and the root cause of many people post student life money worries. It definitely was mine


(Jonathon) #3

Absolutely the same for me. Halifax were all over me at 18 with a £4,500 interest free overdraft. Of course I was stupid.

Right after graduation - £3 a day charge. I was only able to put away £100 a month, but then being charged £90 essentially.

It was 7 years before I paid it off.


(James Prince) #4

For most UK banks they offer a student bank account overdraft facility which is interest free up to £3,000 which helps students with daily life.

Without such access to funds many students would struggle and as the banks offer 0% interest, students only need to pay back the money they borrowed, thus its a special scheme just for students.

In terms of overdrafts in general then yes I do agree with you that they are not the best source of finance due to high overdraft charges.


(James Prince) #5

I feel bad that this occurred to you however, you should off been better at managing you’re finance. I am a student and I clearly understand the terms of my overdraft facility and thus will make sure that any money borrowed would be replaced before I graduate from University.


(Jonathon) #6

Of course. It doesn’t stop it happening though. You’re probably in the minority at being young at university and able to manage your finances in quite the same way.

When I was 18, I didn’t have a smartphone, to check my balance I was basically at an ATM or online but via a fixed computer at my university library. It’s surprising how different this can make managing your finances.


#7

You are a rarity in my experience.


(James Prince) #8

Very true, technological advances has made it a lot easier for students such as myself to manage our finances and be more careful. Thank you for your comment.


(James Prince) #9

I think not. I think students nowadays are quite savvy and understand the risks a lot more than previously. I do agree that relying on an overdraft is not a smart move however, as a student sometimes a short amount of finance is needed at the most inconvenient times and thus, having this facility there if I need it at a 0% interest is much better than using Monzo overdraft facility currently which charges 50p per day. This is therefore the sole reason as to why I have also retained my account for HSBC as well as Monzo.


#10

I’ve been there and done that friend. Whilst you may be brilliant at managing your finances, and I applaud you for that, countless other people aren’t. And I would say students today are the same as students have always been, they just have a smartphone these days.

I found myself at 18 years old having what was essentially free money thrown at me through overdrafts and credit cards which, coupled with a sudden desire to prove my independence and enjoy my first time freedom and it meant I snapped every single opportunity up and to hell with the consequences, I could sleep when I was dead after all.

That overdraft was soon maxed out though, and I had no hope of repaying it at uni. Nor did I have any chance of repaying it when my account suddenly changed to a graduate account and I was told I had to. It took years to understand and recover from my student debt.

What banks do to students is immoral. They train you to take, in the first years you can get credit, as much credit as possible consequence free. Perhaps you might get a free Kettle or a Railcard as well. But then they stick you with payments as soon as you are spat out of the university system and realise you are suddenly saddled with more debt than is manageable or reduce the overdraft in stages, as if you Suddenly have all this spare income.

Suddenly the expectation is, having spent all of your adult life to date being able to spend money without issue, that you have an income which allows repayment and you are savvy enough to be able to manage it.

Some are - you are. Lots and lots aren’t and what a profit banks make from them.

TL;DR - Be careful out there. It’s easy now but it ain’t later on


(James Prince) #11

Love this response. I think that you are right, many students do take this for granted and thus maybe Monzo as the new upcoming, ‘friendly’, ‘transparent’ bank could improve this system and inform students of this danger.

But ultimately my point states that Monzo should offer students a 0% interest overdraft facility whilst at University rather than them take the bog-standard overdraft currently offered by Monzo which will charge 50p per day.

Thank you for your comment.


#12

I could probably agree. A student account seems common these days though I’m not sure I think they should. but I think Monzo also have to build their standard banking features first before a student account, a student account would be bottom of the list for me. Until then, the usual answer applies. Use a different bank.


(James Prince) #13

Well I suppose it depends what Monzo’s strategy is and whether their first priority is to gain and attract more users or whether their first objective Is to aim to begin to turnover a profit.


(MikeF) #14

At the point of only just being profitable per account while still not being profitable overall I very much doubt Monzo can afford to tie its overdraft lending up on 0% deals for students. Maybe later, when the money is there to cover it, but not yet I think.


#15

I disagree :slight_smile:


#16

Also a student and I agree a student overdraft is necessary - part time jobs don’t pay enough to pay the bills so you have to use the student loan. The student loan is often late so the overdraft is needed to bridge the bill payment.

I know its going to be an unpopular thing to say and I understand it was different for those without a readily available mobile back in the day - your overdraft terms are told to you when you apply for the account. If you live outside your means, that’s your fault.


(Jonathon) #17

Personally I think the best thing Monzo can do for students is to help them (and I hate this phrase, bloody government…) live within their means.

Good, solid budgeting, no fees, spending abroad for free, and instant notifications are things that frankly would have helped me massively as a student. One of the major issues was being able to spend (particularly over a weekend) but my balance not actually update until Monday when I would be massively overdrawn or over budget.

That would beat any 0% overdraft in my opinion.


#18

It doesn’t matter at all if your bills aren’t paid though, does it?


(Jonathon) #19

Honestly while I completely understand your point, I find that kind of attitude just isn’t helpful. It doesn’t actually realise the reality of how our society works. People are in debt left right and centre, and it’s technically “their fault” but it doesn’t answer anything.

People are overweight and often it’s “their fault” - saying it doesn’t help anyone.

You’re not wrong, I just don’t know how it helps any discussion.


(Jonathon) #20

I didn’t say no overdraft at all. But a fee-free overdraft encourages the idea that it’s free money - it isn’t.