Student Overdraft Facility - No Charge

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?


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.


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.

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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.

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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.


You are a rarity in my experience.


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.

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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.

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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.


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.

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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.

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.


I disagree :slight_smile:


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.


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.


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


I think this might be because Monzo don’t want to encourage someone to live outside their means whereas HSBC do (because that leads to more charges / fees for them) :man_shrugging:. I’ll caveat this that I expect a stronger deciding factor for Monzo is the cost - they certainly don’t have the financials in place to bankroll free loans for students atm

Seriously though - the idea that someone with very little regular income should live outside this is quite harmful and can set up people with an unhealthy idea of how debt works for life. Overdrafts are useful as a way to smooth out day-to-day blips but if someone is looking to stay inside one for even a full calendar month then they could have the wrong idea about them

If a student accrues £4.5k of “free” debt over 3 years of education they may well struggle to pay that back upon graduation in time to avoid any fees - which is what the bank wants - it’s in its interest to make sure it lends you a large enough amount that you cannot pay it back


We can agree on financial education for sure. My first one would be not to get a fee-free overdraft or to at the very least manage it in a very, very responsible way. However, peer pressure is a wonderfully powerful thing and this isn’t always as easy as it sounds.

My second year of university, I opened another bank account with Barclay’s, no overdraft and got myself a part time job. That with my student loan and a change in lifestyle meant I could just about afford to live. Nothing extreme but still, for a few years of my life I just about managed in the (probably stupid) hope I would graduate into a well paid job.

A bank doesn’t loan money for free to be nice. They know what they are doing.


I don’t see our positions as mutually exclusive :slight_smile:


My interest-free overdraft with Natwest was one of the main reasons I switched from HSBC. They also offered a free railcard.

Not sure if it’s still a thing, but Natwest gradually reduced my interest-free portion of the overdraft after I graduated. It meant I could gradually pay off the full amount without accruing fees.

It was something like:

  • Graduation: £3k
  • 1 year after: £2k
  • 2 year after: £1k
  • 3 year after: £500
  • 4 year after: 0