Student Overdraft in New Zealand-Managing Money While You Studying

Overdrafts are great for students as they can help you meet unexpected expenses and bridge the gap between the credit you have and the expenses have to cover. In New Zealand, a student bank account is one of the most convenient ways to pay for study costs. It offers a student the ability to borrow up to $1,000 of balance without incurring any charges. Unlike other types of loans, a student can pay off his or her overdraft on their own, and some banks allow students to transfer their existing student bank account into a graduate account once they’ve graduated. Read on to learn more about overdrafts in New Zealand and how they work.

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What Is Student Overdraft?

A student overdraft allows students to borrow extra money if they don’t have enough money to cover their expenses. In other words, it means a student can spend more than what’s in his/her account. For Example; if you are a student and you have a bank account from which you can meet up your daily expenses. Suppose you have $1000 in your account but you have to spend $1300. Then the surplus of $300 can be termed as the overdraft that you have to pay in the future. After spending an extra $300 from a student’s bank account, the account balance will show -$300. There are two types of student overdraft in New Zealand:

1. Arranged Overdraft

2. Unarranged Overdraft

Arranged Overdraft: Arranged overdraft allows the students to spend up to the pre-agreed limit. It doesn’t charge the extra interest on the excess amount that students spend from their bank accounts.\

Unarranged Overdraft: In case of unarranged overdraft the students are allowed to spend more money without having any pre-agreed limit. And it changes the extra interest on the excess money that the student spends to meet the unexpected expense.

Where To Get It?

If you are a student in New Zealand and you need to spend the extra money that you have in your credit account then you can take the extra money from your bank account. But all the banks in New Zealand don’t allow student overdrafts so, you need to open a bank account in a specific bank in New Zealand to get a student overdraft in New Zealand.

How To Get It?

To apply for one, you must be at least 18 years old, a New Zealand citizen, and have a good credit history. You must be studying in New Zealand and enrolled in an approved school or university. You should provide proof of your age and enrollment, and have a valid ID like a passport or a driver’s license. Make sure to provide your IRD number as well. To be eligible, you should also have a bank account in your home country.

A bank statement from the 31 days before you apply for an overdraft is necessary if you are applying for an overdraft through an institution. It will serve as a document showing that you have sufficient funds to cover unexpected expenses. Banks will charge you for the remaining balance if you do not pay back the overdraft in full within the agreed timeframe. A bank may charge an establishment fee, which is usually $25 or $35. This fee is meant to assess your credit history, but many banks charge a lower fee.

How Much Can You Get?

In New Zealand, the maximum limit of getting a student overdraft is not fixed. So far if you are a student in New Zealand then you can get up to $1000 to $2000 interest-free overdraft. Let’s say for BNG bank in New Zealand.

Up to $1,000 interest-free overdraft for first-year students
$1,500 for second year students
$2,000 for third and subsequent year students

Interest Rates On Student Overdraft In New Zealand

If you need a student overdraft, you may find it useful to learn about the fees that are associated with them. While all overdraft facilities in New Zealand have different fees, they are generally affordable. Typically, you will be charged a fee of between $2 and $10 per month, which is lower than the average New Zealand bank’s overdraft charges.

Some banks in New Zealand offer overdrafts with no monthly fees for students. Kiwibank and ASB offer interest-free overdrafts for first-year students and up to $2,000 each year after that.

Requirement For It

Overdraft details (Amount Requirement etc. )
Personal details (Name, Address, Type of Bank Account etc.)
Contact details (Email Address etc.)

Companies That Offers Student Overdraft in New Zealand

ASB Bank: ASB bank in New Zealand offers the student overdraft feasibly. This bank provides debit and credit cards totally for free. It allows up to $1000 interest-free overdrafts for first-year students and up to $2000 for the second year and subsequent years students. Around 0.12% facility fee is charged by this company in case of student overdraft in New Zealand.

Westpac Bank: Westpac is another renowned bank in NZ that offers overdrafts for students. It allows up to $2000 interest-free overdraft for the first-year students on application. The facility fee in this bank is lower than that of ASB bank on an overdraft. This bank charges a $3/month facility fee for an overdraft.

ANZ Bank: Overdraft is available, subject to lending and affordability criteria, to all students 18 years or over who are permanent NZ residents. It also provides up to $1000 interest-free overdraft for first-year students and $2000 for second-year students with $3/per facility free on each overdraft.

Pros Of Student Overdraft In New Zealand

An overdraft is flexible
Interest-free borrowing, which lets you borrow up to a set amount without paying any fees
Quite easy and quick to arrange
There is no fixed re-pay date for student overdraft

Cons Of Student Overdraft In New Zealand

For extending overdraft you have to pay arrangement fees
The bank has the right to ask you for repayment of the overdraft at any time
Interest rate is variable
It is tough to calculate the interest rate accurately
It can not be used for borrowing a large amount
Rates of interest may be higher than loans in some cases

Bottom Lines

An overdraft is a useful feature for students to use for unexpected expenses and purchases. Its interest-free feature means that the overdraft amount is never considered part of a student’s income. Once they’ve graduated, the rate will start increasing. A student should always remember that the overdraft amount is only an overdraft, not a loan. While 0% overdrafts are handy for students in the short term, it’s crucial to never go over the limit that the bank has agreed to give you. Otherwise, you’ll end up incurring fees for going over the agreed-upon amount.