Advise on my finances - finally in a position to start saving

Jakestar

Hi all,

Firstly I hope this is the correct forum to post this in, if not could it be kindly moved?

Having secured a "proper" job at last since leaving uni I've just about got my finances in order, and will be starting to save (in the short term (6 - 8 months) for a deposit for a car, and in the future for a deposit for a house) and I would like some advice on how to "manage" my money, as I have access to interet free credit that I think could be invested somewhere, somehow.

My situation:

HSBC graduate account - £1000 interest free overdraft
- my main account which salary gets paid into and I use on a daily basis
- I have now cleared my overdraft, just

Halifax student / grad account - £500 interest free overdraft, balance is - £250
- I dont really use this anymore, apart from making small payments each month as they requested I do something with it!

I have no savings..

I'll be in a position to save about £200 - £250 per month moving forward.

What are my options? Im thinking that I effectively have £1250 of interest free credit available to invest, how should I save it? Also If I did this I'd "mess up" the HSBC account (ie not knowing where im coming and going, as I'd always been in the OD).

Should I open a new current account and pay my salary in there, then use the credit available from HSBC?

Thanks in advance for your replies, if you need any clarification let me know.

jem16

Jakestar wrote: »

What are my options? Im thinking that I effectively have £1250 of interest free credit available to invest, how should I save it? Also If I did this I'd "mess up" the HSBC account (ie not knowing where im coming and going, as I'd always been in the OD).

As you are no longer a student are you still eligible for the student account?

Personally I would not want to borrow to save and would just find a suitable savings accounts, either a Regular Saver or instant access.

agsnu

jem16 wrote: »

As you are no longer a graduate are you still eligible for the graduate accounts?

What do you mean by this? You don't ever stop being a graduate...

jem16

agsnu wrote: »

What do you mean by this? You don't ever stop being a graduate...

Sorry I meant to write student. I shall amend my post.

Jakestar

jem16 wrote: »

As you are no longer a student are you still eligible for the student account?

Personally I would not want to borrow to save and would just find a suitable savings accounts, either a Regular Saver or instant access.

With HSBC its their graduate account, with Halifax they rarely contact me, havn't changed any T & Cs, OD limit, offer me anything else, spoke to me about grad options etc etc ever so I've just left it as it is. When I log in online I belive it says student account, but since I'm not using it (and could clear the OD if I needed to immediately) I've just left it be.

I see your point about borrowing to save, which is the main reason I've been workig towards clearing the OD (even though its not costing me anything) rather than saving for the last 6 months. Im sure some would say im missing a trick though..

jem16

Jakestar wrote: »

With HSBC its their graduate account, with Halifax they rarely contact me, havn't changed any T & Cs, OD limit, offer me anything else, spoke to me about grad options etc etc ever so I've just left it as it is. When I log in online I belive it says student account, but since I'm not using it (and could clear the OD if I needed to immediately) I've just left it be.

From memory my sons both had student accounts with HBOS. I believe they could retain them for a year after graduating but I may be wrong.

I see your point about borrowing to save, which is the main reason I've been workig towards clearing the OD (even though its not costing me anything) rather than saving for the last 6 months. Im sure some would say im missing a trick though..

I suppose it's different when it's interest free. However that's just my opinion - my generation tended to save rather than borrow. Others will disagree.

Jakestar

jem16 wrote: »

From memory my sons both had student accounts with HBOS. I believe they could retain them for a year after graduating but I may be wrong.

I graduated 14 months ago though

It took them about 3.5 years to ask me to start paying something into it! (as I had maxed the OD while being a student in year 1 and just left it!!) It appears to me they aren't the most organised!

CLAPTON

you're making life a bit complicated

I see no benefit in opening a third a/c
HSBC won't be happy if nothing is going in and you are in OD.

Concentrate on getting the best interest rates on your savings ... start with an ISA as its tax free.

Now you have a real job, don't get in the habit of always being in OD... it is usually seen as showing some-one in financial difficulty

Masomnia

I've had my overdraft in savings accounts for about a year and a half now. I'm going into my final year now and I'm going to start paying it off, so that I'm in the black when I graduate. I had an Egg savings account paying me 6.3%, but since that comes to an end next month I'm not sure it'll be worth it.

The highest rate you can get is currently 3.25% I think, as you'd need instant access in case they ask for the overdraft back. So you'd only make £32.50 less tax after a year on a £1000 overdraft. I don't think it's worth it personally.

Primrose

Now you're a taxpayer it makes sense to use your ISA allowance so that you don't pay tax on your savings. However, if you're aiming to use the money in less than 12 months, the instance access ones are not paying high rates of interest at the moment. Your other alternative would be to find a Regular Saver Account where interest rates are higher but this will commit you to saving a specific amount every month. I don't see any sense in borrowing money to save. Having got yourself debt free it seems far more sensible to stay that way until you need to take a loan for a car or a mortgage.