14 July 2008 507 views One Comment Print This Post  Email This Post

What is the difference between a regular and student overdraft?

An overdraft is when the amount of money withdrawn from a bank account is greater than the amount actually available in the account, the excess is known as an overdraft, and the account is said to be overdrawn.

For regular account holders, when they take more than they have, the are in effect borrowing money from the banks and this is chargeable at interest rates similar to a credit card, sometimes more.

For student account holders, there overdraft is subject to 0% interest and so you are allowed to borrow without paying a premium for it! This is good news for students, but be careful as there are a few horror stories of accounts being frozen and banks demanding the full balance be paid back immediately.

This is only generally if you continue to withdraw and never deposit any money into your account, so make sure you regularly topup your finances so the bank knows you can pay the borrowed money back.

Ellie

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