I have a student account with a bank in UK with a overdraft of 500 pounds. Speaking to one of the clerks, he explained to me that the overdraft bears no cost and I can keep my bank account in the red for up to three years (the amount of time I will be a student for).
I am currently opening a regular account at another bank (it offers a better ISA rate and regular saver) which I shall make my main account (as I will be receiving money regularly from my scholarship and small time teaching jobs) to save up for the future and to be able to pay up my student loans.
Question is: is it ok to max out my overdraft at the previous bank for all the time they allow me to? This is essentially free credit, that I can just stash in the other bank together with the rest and earn interest on.
Will this damage my credit rating (assuming I pay it off as soon as I stop being a student)?
Will the bank I am overdrafting contact me or ask me why I am not making movement on the old account? Can they ask me to cover the overdraft at any point in time while I am still a student?