These are the accounts for you if you occasionally dip into the red.
My first encounter with an overdraft was when I went off to University. Indeed, a bank account that sits in the red is now a seemingly inevitable feature for most students.
As a result, a decent, interest-free overdraft is a crucial part of any student account. And students got a boost last week when HSBC announced it was to increase the overdrafts available on its student accounts by an extra £1,000. Students can now make the most of a whopping £3,000, absolutely interest free, during their studies.
However, it’s not just students who have the need of a decent overdraft feature.
According to new research by R3, the trade body for insolvency professionals, a whopping EIGHT MILLION Brits will have made use of their overdraft at some stage in June. Eight million people. That’s an awful lot of people who ended up spending more than they had last month.
Of course, if you have an interest-free facility, and you’re using your overdraft sensibly in order to reduce your debt and get your finances back under control, that’s not necessarily a bad thing. I know I’ve used mine a few times since my son was born. But it’s fair to suggest that a significant proportion of those eight million people are not enjoying an interest-free overdraft, and are instead faced with interest and perhaps even charges as a result of dipping into the red.
Thankfully, there are a fair few current accounts out there which do offer a decent overdraft facility, even if you’ve long since finished your studies!
By a distance the best overdraft facility on offer comes from the Santander Preferred current account.
With this account, you enjoy an absolutely free arranged overdraft for a full year. Santander will match your existing overdraft (depending on your circumstances) up to as much as £5,000. That’s a seriously substantial overdraft!
Indeed, the account is also fantastic for those months when you finish in the black too, as it offers a whopping 5% interest on your balance. So it’s a great option no matter what happens each month. And on top of all that, you can also get £100 in cashback just for taking out the account, so long as you switch over your direct debits and pay in £1,000 a week.
Of the course there is a big problem with the Preferred account – it’s with Santander. As we all know, the bank has a few issues with its customer service. Indeed, it regularly tops polls of the worst bank for customer service, and whenever we write about Santander we get plenty of horror stories from our readers. Having said all that, I’ve banked with Santander and have no complaints, so perhaps things are improving.
First Direct is the polar opposite of Santander, in that whenever there is an award going for customer service, First Direct tends to win it.
And not only is the customer service great, but the bank’s 1st Account is also a good option for those of you who need an overdraft. With the 1st Account, you can enjoy a completely interest-free £250 overdraft.
If you move above that level, or if you request an overdraft more than once every six months, then additional charges will apply.
As with the Santander account, there is also the opportunity to pocket some cashback when you take out the 1st Account. You get £100 when opening the account, and if you decide to leave after a year, you’ll enjoy another £100! However, you will need to pay in £1,500 a month, or pay a monthly fee of £10.
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