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Does NatWest expect students to make regular deposits?

NatWest bank

Changes to the T&Cs of NatWest student accounts mean customers must deposit £750 every three months or risk charges. But with gaps between student loan payments often longer than three months, is this fair?

We all know going to university isn’t cheap. According to the NUS, the average cost of living and study for a fresher outside London is almost £16,000 per year. Student loans and part-time jobs rarely cover this in full, which makes having an interest-free overdraft a valuable part of uni life.

So, how would you react if your interest-free buffer was suddenly ripped away halfway through your first year? Silly question really.

NatWest’s changes its student accounts

Well, we were stunned when a concerned father alerted us to the letter NatWest had sent his daughter listing changes to her student account’s terms and conditions. The letter explained that, to prove she was using her NatWest account as her “main current account”, she’d need to put in at least £750 every three months.

But what will happen during the lengthy period between a student’s last loan payment (usually April) and their first of the new year (September)? Would they lose access to their interest-free overdrafts if they failed to keep up with deposits over the summer?

A commenter on the social news site Reddit, who’s facing the same changes to their NatWest student account, even contemplated waiting a month or two after getting their loan payment, withdrawing £750 from their account and then depositing it straight back in. Ludicrous.

Clearly there’s an obligation for students to make a certain amount of credit and debits (nine every three months with NatWest) to show they’re using it as their main account. But is £750 every three months perhaps asking too much from customers with such limited means of income? The concerned father, who got in touch with us, had this to say:

‘This seems to be a rather underhand way to recover additional fees from indebted students. Especially underhand as most students probably won’t read the letter properly – my daughter thought she would be OK until I pointed out she doesn’t get a payment in July.’

Keep your bank informed

We spoke to NatWest to clarify the situation. It told us it recognised that a number of students receive their student loan payment just three times a year and, in those cases, it assured us it would continue to provide interest-free overdrafts without imposing penalties.

NatWest also said individual circumstances would be taken into account when applying these rules. It will be writing to students with further information on this over the next few days.

The best advice is to keep your bank in the loop. If you think you could be affected by these or similar student account T&Cs, speak to a branch advisor.

Our September issue of Which? Money looks into student accounts in more depth, but in the meantime, are you assured by NatWest’s comments despite changes to its T&Cs?

[UPDATE 11 AUGUST 2011] – As alerted to us by commenter Graeme Veale below, NatWest has decided to change its T&Cs. It now requests students to deposit ‘at least £750 every six months’. Success!

Graham Veale says:
10 August 2011

In response to what I imagine to be a lot of complaints, Nat West/RBS have rapidly revised their policy – see http://www.natwest.com/personal/students/g1/student-current-account/account-details.ashx#tabs=section1 which now states “You must use your Student Account as your main current account by depositing at least £750 every 6 months and making at least 3 debit transactions every month”. Panic over!

StonedPhysicist says:
11 August 2011

I’m glad to see my post on Reddit has spread far enough to actually get NatWest to listen. I’m not surprised at all that there was some concern over this.
I currently work two jobs, in addition to doing a pretty hefty degree, and I was wondering whether I would be able to make £750 in these three month intervals, even with my loan, then wondering how my friends (many of whom are unemployed) would cope.
I know an interest-free overdraft may be seen as a “luxury” to some, but without it, I would not have survived the past three years, plain and simple. That extra safety net over summer has kept me alive, and I would hate for anyone to lose such a valuable asset on a technicality.

Bravo to Which? for helping with this. 🙂

Ian Savell says:
11 August 2011

I’m the concerned parent who also flagged this up with Which? The local branch manager was quite shocked when my daughter took the original letter in to show her the problem. With the prompt action from the bank it looks like the whole thing was a gaffe by an ill-informed employee in the marketing department. Thanks to StonedPhysicist and Which for their part in flagging up the mistake and to NatWest for fixing it promptly. Usefully, the revised conditions also now set out what happens to any overdraft if the main account condition is not met, a point not covered by the original letter.

The whole episode is ironic because it was NatWest’s excellent offering on student overdrafts that made my daughter join them in the first place, not that she is planning to use it to the full.