How Students Can Keep Their Bank Balance in the Black
For many students, living life on the edge of their bank balance is par for the course. This is generally the first time that they’re living on their own, and so they haven’t yet got to grips with managing and planning a budget. While this is fine for the most part, problems can start to occur when you really push your account to its limits and start to overdraw. Here’s what you need to know.
What’s an Overdraft?
Overdrawing your account, also known as an overdraft, is a common feature many banks offer to their customers. This allows you to make purchases even if it puts your account into a negative balance. For instance, if you only had £30 in your account and bought a £50 pair of shoes, your balance would display -£20. If your bank account doesn’t allow you to overdraw and you try to use your debit card when you don’t have the necessary funds, your card will be rejected and the transaction will be declined.
Most bank accounts that allow you to overdraw will then charge you a fee for doing so. This will likely be for each transaction you make, so if you buy multiple items when your account’s in the red, you could be hit with the same fee several times over. You may be able to take out some kind of overdraft protection service on your account. This means that when you overdraw, the money is taken out of another one of your accounts, such as a savings account.
How to Stay in the Black
However, it’s important to realise that just because you can overdraw it doesn’t mean you should make it a regular occurrence. Overdrawing should only be used in rare situations, like an emergency, and not as your primary method to pay for goods. In the event that you are in fast need of money before your next student loan comes in, there are various services available to you. Look for a lender that specialises in lending small loans to students, as these will typically have much better interest rates than your other options. Try to keep any transactions at a few hundred pounds at most and, if possible, seek out a lender that offers some kind of grace period for late payments. This is crucial in the rare event that there is any problem when your student loan comes in.
Your time at university is just as much about learning new life skills as it is about furthering your education. The real way to stay in the black is to plan out your budget accordingly until your next loan payment comes in. Well, that or asking Mum and Dad for the cash that is…
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