Savanna Hoffman
Santander's student account is a popular option for many UK students due to its benefits, such as convenient arranged overdraft accounts and travel perks. When it comes to paying back your student overdraft, Santander typically provides a grace period. Upon graduation, your student account will usually be converted into a graduate account, which offers a 0% interest rate on the pre-arranged overdraft for up to two years. During this time, you are expected to repay the outstanding amount. It's important to note that an overdraft facility is intended for short-term borrowing rather than long-term use. Santander can request repayment at any time, and they reserve the right to reduce your overdraft limit if they are dissatisfied with how you manage your account. To avoid charges, it is recommended to regularly monitor your finances and aim to clear your overdraft as soon as possible.
| Characteristics | Values |
|---|---|
| Time to pay back overdraft | 2 years after graduation |
| Overdraft amount | £1,500 in years 1-3 and up to £2,000 by year 5 |
| Overdraft interest | 0% |
| Overdraft alerts | Yes |
| Overdraft reduction | Yes, Santander can reduce the limit at any time |
| Minimum funding requirement | £500 per academic term |
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What You'll Learn
Graduate accounts
Santander's student account offers an interest-free arranged overdraft of £1,500 in years 1-3 and up to £2,000 by year 5. This overdraft facility is designed for short-term borrowing and is subject to status. When students graduate, their account is usually moved to a Graduate Account, which also has a 0% interest rate on the pre-arranged overdraft (up to £2000) for two years. After this period, the account will switch to a regular account, and if the overdraft is still being used, a fee of £1 per day will be charged.
The Graduate Account is a good option for those who need to continue borrowing money in the short term after graduating. However, it is important to note that an overdraft is not designed for long-term borrowing, and it is advisable to pay it off as soon as possible. Santander can request repayment of the overdraft at any time, and it is good practice to avoid treating the overdraft as your own money.
Santander provides helpful overdraft alerts to customers' phones, notifying them when their account uses the arranged overdraft, if a payment has been refused, or if upcoming direct debits might be refused due to lack of funds. These alerts can help customers avoid missing payments and potentially damaging their credit score.
It is worth noting that the terms of the account allow Santander to reduce the overdraft limit at any time if they are not satisfied with how the account has been managed. Customers can also request to have the limit lowered at any time. Santander also offers a range of other accounts that may charge less for using an overdraft, and it is quick and easy to transfer to a different account within their range.
In summary, Santander's Graduate Account provides a two-year interest-free overdraft facility for graduates who need to borrow money in the short term. However, it is important to be mindful of the potential risks of overdrafts and to manage finances effectively to avoid any issues.
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Interest and charges
Santander's Edge Student current account offers an interest-free arranged overdraft. This means that you won't be charged interest on any money you borrow through your overdraft, up to a pre-agreed limit. However, it's important to note that this may not apply to other current accounts offered by Santander, and that different current accounts have different overdraft interest rates and charges.
While Santander does not charge fees for allowing or refusing a payment due to lack of funds, there are still potential charges to be aware of. If you go beyond your arranged overdraft limit or do not have an arranged overdraft in place, you will incur an unarranged overdraft, which may result in additional fees. Additionally, if you are unable to pay back your overdraft within the given timeframe, you may be charged a daily fee.
To avoid unexpected charges, Santander offers several tools and services. You can receive alerts via text, push notification, or email before your account is charged, giving you time to pay in money and reduce potential charges. They also offer an Overdraft Protection option that helps reduce overdraft fees, as well as an Overdraft Eligibility Checker to determine how much you can borrow before applying for an account.
It's important to remember that the terms and conditions of your overdraft may change, and you should regularly review your account to stay informed about any updates. While Santander's Edge Student current account offers an interest-free arranged overdraft, this may not be the case for all their current accounts, and it's essential to understand the specific terms and charges associated with your chosen account.
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Borrowing alternatives
Loans
Loans are a common way of borrowing money, which can be more affordable and suitable for your needs. Santander offers a range of loans with different interest rates and charges.
Credit Cards
Credit cards are another alternative, allowing you to borrow money for purchases or cash withdrawals. Again, Santander provides various credit cards with different features and benefits.
Overdrafts at Other Banks
If you are a student, you may consider opening a student bank account at another bank, which may offer a larger overdraft. For example, some banks offer overdrafts of up to £3,000 for first-year students.
Savings Account
If you don't need the full overdraft amount, you could transfer the remaining funds to a savings account. This way, you can earn interest on the borrowed amount while you're a student.
It's important to remember that borrowing money comes with responsibilities and potential costs. Make sure you understand the terms and conditions, interest rates, and charges associated with any borrowing option you choose.
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Overdraft alerts
An overdraft facility is designed for short-term borrowing. It is not meant to be used as a long-term solution. Santander will send you alerts to help you manage your overdraft usage and avoid charges. You will receive alerts via text, push notification, and/or email. These alerts are automatically enabled, but you can manage your alert settings at any time using online banking.
You will receive an alert when your account uses your arranged overdraft. You will also be alerted if a payment has been refused or if your upcoming direct debits might be refused due to lack of funds. These alerts can help you avoid missing payments and damaging your credit score. You will have until 8 pm on the day you receive the alert to credit your account with cleared funds and move your balance back into your arranged overdraft or into credit to avoid interest.
It is important to note that Santander can reduce your overdraft limit at any time if they are not satisfied with how you have managed your account. Additionally, while there is no set timeframe for repaying your overdraft, it is recommended that you pay it off as soon as possible. When you complete your course, Santander will typically move your account to a Graduate Account with a 0% interest rate on the pre-arranged overdraft for up to two years. After this period, your account will switch to a regular account, and you will be charged a fee if you are still overdrawn.
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Account switching
If you have a Santander student account, your account will automatically be transferred to a graduate account at the end of your course. This graduate account will have a 0% overdraft for two years, after which your account will switch to a regular account. If you are still overdrawn at this point, you will be charged a fee of £1 per day.
To avoid this, you could consider switching to a Santander account that does not offer an overdraft. Santander offers a range of current accounts that may charge less for using an overdraft than your current account. It is quick and easy to transfer to a different account in the Santander range.
If you are switching from another provider, you can choose to switch to Santander when you apply. Santander will move all your Direct Debits, standing orders and payments using the Current Account Switch Service.
It is important to remember that different current accounts have different overdraft interest and charges. You must repay any overdraft when Santander asks you to, in line with their General Terms and Conditions.
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Frequently asked questions
You'll have two years to pay it back. Your account will be automatically converted to a graduate account with a 0% interest rate on the pre-arranged overdraft. However, Santander can request repayment at any time, and they may reduce your overdraft size or limit if they are concerned about your ability to repay.
You can pay back your overdraft by depositing money into your account. It is recommended to pay it off as soon as possible and switch to an account without an overdraft to encourage better financial habits.
If you don't pay back your overdraft, Santander can call-in your overdraft at any time. After the two-year grace period, your account will switch to a regular account, and you will be charged a fee of £1 per day if you are still overdrawn.
