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Mike1989

If you put it into an account were interest is calculated monthly, you will make £2 or slightly more per month if you put in a savings account of 5% with £500. That is not worth it as far as I'm concerned. You might as well get a Sunday job at minimum wage and work say 10 till 4 and you'll make yourself £33 roughly. If you do both days Saturday and Sunday at such hours you will make more money than borrowing it and putting it in an account.

They can request that overdraft to be repaid at any time, they can also remove the overdraft or restrict it. So you will have to repay that money. They can also check and it can lead to cancellation of your overdraft or account if they believe you are breaching their terms and conditions. Now it is likely they don't check what you do, and, they probably would love you to borrow money and go overdrawn so they can get some more money out of you. But it is not god advice for someone who is trying to get their finances sorted.

As far as I'm concerned, and it is my own personal opinion, borrowing to make £25 over a year is not worth it. I certainly wouldn't borrow money from my overdraft to make that amount. As if the interest is calculated monthly you make a minimal amount of £2 and a few pence, not worth it. That £2 and a few pence will probably, and that is if you don't withdraw it or your bank doesn't request repayment of the overdraft, not get you very far at all. Its easier to get a job for a couple of days a week, or, get a job over Christmas when Uni has finished and if you work 4 or 5 days a week, save up the money. You will make more money than borrowing and putting it in an account. But hey, everyone to their own but I wouldn't advise someone who wants to get their credit under control to borrow to make a couple of quid every month. That's if you can find a 5% account, it is unlikely in the current climate...

Lokolo

I put £500 of my overdraft in my savings. That plus the £3000 I have just adds a little extra on.

Its free for jesus christ sake and its 5% for moving money across. I get paid £25 for going, log into Egg -> deposit -> £500. Thats 2minutes, easy money.

Soon you'll be saying its not worth taking out student loan if you don't have to

Mike1989

Its totally up to the person. I don't see the point in using an overdraft to make £25. It is easy money and I wouldn't throw it in the bin, but, I would rather get a job and make more money that way and keep my balance positive rather than negative. I'm not criticising, or at least I don't mean to, people who do it. As it is that persons choice what they do with their money. As for the student loan, that is different, but I have only applied for tuition fee and the grant part. Not the maintenance loan, don't need it. Oh and if you don't need a student loan, eg. tuition fee or the maintenance loan, you shouldn't take it. However, you should apply for the maintenance grant as that is free money.

Lokolo

See thats what I mean, you are sooo lazy with your money, every £1 counts.

Student Loan Aim for Moi:

Take Out Maintenance Loan: ~£13000
Put in Savings: ~£13000

Each year:

Loan @ 3%: £390 interest added
Savings @ 5%: £650

Each year: profit is £260, which is pretty good for just taking out a loan and putting it in a savings account

However as you say, depends on each person I guess.

Mike1989

Suppose you are right when you take the break down. As I got £4400 give or take of grant and loan, not applied for the loan part this year. So having put that in a 5% account I've made a decent amount on it. But, I don't think of it as lazy not to take out the loan and put it in an account. I know I wouldn't touch it so I could leave it in an account and let it grow, but I'd rather only take out what is needed. First year I didn't touch the grant and loan, so maybe I am lazy or stupid for not taking it out and making a profit again this year.. But I'm happy with how I am handling my finances and fingers crossed with what I am saving, and with the grants, and 1k a year bursary I get from uni, I should be pretty much debt free when I come out of uni. And that is how I plan to stay, don't want any loans that are not necessary for a couple of hundred quid. Would rather work two days a week and make £70 or so quid and then save half of it. As that is how I am building up my savings right now.

But I suppose I can see the point why people take out loan and grant, save it, make a profit. It isn;t a bad idea at all. I just think that taking money from an overdraft to make a small amount is not really worth it. However when looking at the loan and grant profit over a year, it is.

Lokolo

Indeed. Yeh I didn't mean you were lazy lazy, you're just MSE lazy. When you've spent a year on this site you do anythig to get your hands on money. :cool:

PinkPig

Mike1989 wrote: »

It is easy money and I wouldn't throw it in the bin, but, I would rather get a job and make more money that way

Even better, get a job *and* take the free £25 - they're not really exclusive options!

I do get that to some people opening accounts and moving money around is complicated, runs the risk of making mistakes and paying charges, and doesn't make enormous amounts of money. If you're a poor student and intelligent though, I really don't see the point in saying no to free money for the sake of it.

Mike1989

The point is you don't get £25 in your hand. Interest is not calculated immediately on the amount in the account and put into your account. Interest is calculated generally monthly or yearly. Therefore you'll get a couple of quid a month, or £25 at the end of the year in a 5% account. That is if you can find such an account. I recently got a Halifax Guaranteed Reserve Saver which is fixed for one year at 5.5% with the grant money in. But now that same account is 3.5%, and a web saver is 1.95%, Natwest offer 2.37 on an introductory rate with a 2.10% bonus for 12 months. So there are accounts that you can get average rates on, some have bonuses. So if you are a person who can guarantee that you will not need that money for 12 months, fair enough, put it in an account and make some money.

I have done it myself keeping the grant and loan going into a decent rate cash card at YBS at 5.5%. So I made decent interest so I am not totally behind the door in not using my money to make money. But I knew that I could manage without it, the question for a "poor" student is can they manage without the back up of a £500 overdraft when they have been using it already. There is a slight difference. And there is also the difference in that the overdraft can be asked to be repaid on demand, whereas the grant and loan are not repayable on demand. And the loan is only repayable when you are earning money. So I kinda took a risk with money which didn't need repaying until I was in a job that I am earning over a certain amount. The overdraft can be repaid on demand and that is a less than sound investment. Unlikely they will want it back, but in the current climate you just never know.

And when your talking current savings interest rates of 2% and 3%, for £10 or £15 which you only get in your hand at the end of twelve months. I just don't see it as worth it. It is best keeping the overdraft money in its place in case you need it. But I can also see the flip side that if you aren't going to touch it, use it to make money. But won't being in the red and using your overdraft as the way you live affect your credit rating?

mellymeep

The terms of my nana giving me my inhertiance early was so that I wouldn't spend it all again unfortunately. I'd love to just whack it all in a savings account but its not possible. I'm the first to admit that im absolutely appauling with money and if its there in my account I will spend it.

Im considering opening a normal current account somewhere else and getting my wages paid into that, and just having a cash card on that.. one which I can't use online!!

Im doing this now because I have another year at uni (2 if I go onto do a PGCE, but that will be funded for me) and come graduation I don't want to be faced with a £2000 overdraft which needs to be paid off pretty sharply before I start getting charged for it. Being in minus money everytime I go to check my balance is mega depressing, I just want to start having some disposable income, and especially with the state the countrys in at the minute, would like to get out of living off credit.

PinkPig

Mike1989 wrote: »

But won't being in the red and using your overdraft as the way you live affect your credit rating?

Not as far as I'm aware. Having had credit helps your credit rating and is much better than not having any history at all. If you're a student it's also likely to be several years before you need a mortgage anyway. Going over your limit or failing to pay it back if required to is another matter entirely.