Student Overdraft

Student Overdraft: A Common Source of Finance

A student overdraft is a common source of finance for higher education students and just about every high street bank offers a student overdraft facility as part of a student bank account package. Many banks will offer 0% interest on a student overdraft until the student has completed/come out of higher education. It is at this time when a student overdraft can become a problem, especially when a student overdraft balance may have exceeded £2000.

Student Overdraft Problems

Question

I have a current account with Barclays which I left dormant with -£146 (using a -£150 student overdraft limit after finishing as a student). In January 1999 a statement was returned to Barclays marked gone away, yet I continued to live at my address. I received no information about my current account till I moved house and reported my change of address. My current account had been marked 'gone away' by Barclays.

Barclays have now issued a termination of overdraft notice for £320. During this time interest had been charged on the account taking me over the agreed limit and incurring automatic monthly charges of £20. I have received statements for a loan I have with Barclays, as well as information outlining the expiry of my student status, moving me from a graduate account to a standard account. I received no notice of any charges or interest during this time, and no statements for my current account. Do I still have to pay the charges and interest incurred if I was not sufficiently informed of my accounts status? Or, do I have to take responsibility for not monitoring my account?

Reply

I'll deal with your last point first. You do have to take responsibility at all times. Barclays only have to send you a statement as agreed. If the last statement was returned 'gone away' and they stopped sending further statements, they acted correctly.

As to the status of your account, if you were AWOL as far as Barclays were concerned it is difficult to understand why they looked at your account as a live account. After all, how many accounts have banks frozen over the years because they seem abandoned and accumulate interest to the detriment of the banks annual profits!

The question of interest is not so straight forward. In this type of situation, common sense is more important than who is right or wrong. A £146 overdraft escalating to £320, an increase of £174, is ridiculous and should have been frozen at some early stage. What is the true damage to Barclays? They have every right to interest say £30 and an administration charge of £24, a round £200. Offer them this figure in 'full and final' settlement. 'Most' lenders would accept this.

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