Overdraft money into ISA?

laurenced

Hi all..

I'm new to MoneySavingExpert and I'm looking to reduce my students debts (woe is me).

I've got an HBoS student overdraft which can potentially go to £2,100.. basically, I got the impression from Martin's Student Banking article (http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1093692301,68353, ) that it's possible to take out all the overdraft cash and stick it in a high interest savings account.

I've got an ISA from some cash I had a few years ago (sadly that's all gone) and I'd like to screw the bank out of some pennies if I could.

Is it defrauding the bank to put their overdraft cash into a savings account held with them? I would imagine they would do everything they can to stop this! If not, then I'm sitting on ~1200 of interest free overdraft cash which could be earning me interest.

Is this possible/legal?

Thanks in advance!

-L

Sillychuckie

Yes, its possible.
Yes, its legal.
Not all that moral, but neither are the banks, chargint £20+ for 1p overdrawn.
My vote: Do it...

I have done just that, with 3 student accounts over my years at university.
They do however have the rights to demand you pay off the overdraft any time should they think you aren't using the account. If that happens and you are required to withdraw from the ISA, keep in mind you wont be able to put the money back in if you have hit the 3k limit.

I'd advise you do it, but every now and then, use the accounts for minor things so it looks like you haven't just nabbed the money and forgotten about it.
Also remember that you may have to pay all the overdrafts off when you graduate but you of course get to keep any interest earned.

PS) I assume the overdrafts are interest free. If they aren't, forget about it.

david78

Nothing wrong with this at all. Do it if its interest free.

laurenced

Fantastic!

Well I intend to do it tomorrow. The account is currently ~800 overdrawn, so I'll make 1000 OD my 'usage limit' and put the remaining 1100 into my ISA. I use the account all the time and my student loan gets paid into it so there's no chance of them thinking I'm leaving that account dormant.

Cheers guys!

laurenced

Here's a thought.

My ISA is getting a mere 3.5%, which won't yield much on £1100 of savings. So, what would be a better way to keep £1100 for a fast return? Obviously I'm not in a position to invest it (I need to have absolute certainty that the 1100 won't disappear) but if there exists a savings account with >3.5% I'd be most interested.

anticlaus105

Should be no problem with this. I use my A+L 0% overdraft money in my online saver. No reason why you couldn't put it in an ISA. Just make sure you pay it back before the 0% ends (assuming it is 0%).

If you haven't opened an ISA this year look at NS&I direct isa at 5.05%.

laurenced

anticlaus105 wrote:

Should be no problem with this. I use my A+L 0% overdraft money in my online saver. No reason why you couldn't put it in an ISA. Just make sure you pay it back before the 0% ends (assuming it is 0%).

If you haven't opened an ISA this year look at NS&I direct isa at 5.05%.

It is 0%.. thanks for your help!

Another thing - I was looking at the unfair bank charges article on MSE and I've had a couple of charges (only £40 but hey, money's money.. especially since I've got none).. I'm wondering if it's worth sending a letter? Are HBoS likely to just laugh at it?