Help with student saving please???

Button07

ok. so for now, i get the impression that its a good idea to do the following:

-open up an account with the post office at 2.9%
-do the 'dripfeeding' technique thats on here, and have a standing order paying in between £100-£300 into a first home saver account with santander.

is this right? a few things that worry me about the santander one though (although i think these are general questions that would apply to any account):
-they pay your interest on the anniversary of you opening your account, right? so what if you only have the account open for 6 months, do you still get interest when you close it?
-how do i find out if the interest rate changes? i read something on a forum here somewhere about them not having an online account so they cant check that the interest rate is still being paid as they expected..have i got that right? (sorry, im a new user so it wont let me send the link for this forum!)

as for later on...im still rather confused about the whole isa thing. so if i were saving my money in an account that had a higher interest rate than an isa does it make sense for me to move the full allowance into an isa at the end of each tax year so that its eventually stored in an isa by the end of my course? i think im expecting to save about £20k (without interest) so that is approx 4 payments of £5k right? otherwise, if i dont spend it in my first year after my course ill get taxed at least 20% on it yeh? is that right? or is it just the interest that gets taxed?

im sorry, i hate coming across as thick as this! you guys are all helping so much though, thankyou!!

Lokolo

Button07 wrote: »

ok. so for now, i get the impression that its a good idea to do the following:

-open up an account with the post office at 2.9%
-do the 'dripfeeding' technique thats on here, and have a standing order paying in between £100-£300 into a first home saver account with santander.

Yes correctamundo.

However you may not be able to setup a standing order and you may have to do it manually once a month (set a reminder on your phone or something.

Button07 wrote: »

is this right? a few things that worry me about the santander one though (although i think these are general questions that would apply to any account):
-they pay your interest on the anniversary of you opening your account, right? so what if you only have the account open for 6 months, do you still get interest when you close it?
-how do i find out if the interest rate changes? i read something on a forum here somewhere about them not having an online account so they cant check that the interest rate is still being paid as they expected..have i got that right? (sorry, im a new user so it wont let me send the link for this forum!)

Interest is calculated daily and credit annually. If you close it you get the interest that's been calculated upto that date. So 6 months interest would be given to you should you close it after 6 months.

Button07 wrote: »

as for later on...im still rather confused about the whole isa thing. so if i were saving my money in an account that had a higher interest rate than an isa does it make sense for me to move the full allowance into an isa at the end of each tax year so that its eventually stored in an isa by the end of my course? i think im expecting to save about £20k (without interest) so that is approx 4 payments of £5k right? otherwise, if i dont spend it in my first year after my course ill get taxed at least 20% on it yeh? is that right? or is it just the interest that gets taxed?

Yes thats the idea. But don't leave it til the day before, do it at least a week in advance.

It is only interest that gets taxed, so you won't lose out on a lot don't worry.

Button07

Lokolo wrote: »

Yes thats the idea. But don't leave it til the day before, do it at least a week in advance.

It is only interest that gets taxed, so you won't lose out on a lot don't worry.

In this case then....is it better to leave it in the higher rate regular saving accounts for 4 years and then risk being taxed on interest when i graduate for a bit, or better to not be taxed when i graduate and make sure its all in an isa, but at a lower rate? is there a way to work this out?

thanks again Lokolo :T

Lokolo

Button07 wrote: »

In this case then....is it better to leave it in the higher rate regular saving accounts for 4 years and then risk being taxed on interest when i graduate for a bit, or better to not be taxed when i graduate and make sure its all in an isa, but at a lower rate? is there a way to work this out?

thanks again Lokolo :T

Persoanlly, I have put everything in ISAs because I didn't know how long I wanted to keep the money. But it's a matter of personal choice.

We don't know the future of rates, ISAs could drop a lot, and then you'd wish you just went back to savings accounts and vice versa.

jennifernil

You could also consider a regular saver ISA. Principality sometimes introduce a good one in April, last April they gave 4%. You can pay in upto £425 per month (that's this years one), but if you need to cut back in some months, they let you top it up to the full ISA amount in March.

The Halifax ISA Direct is also worth considering. It is paying 2.8% at the moment, 3% if you are an HBOS customer with certain other accounts. It is good in that it is instant access, so your money is available if you need it. This is just a 12 month rate, so you may need to move it after that.

If you have a lump sum at the moment, you could open this ISA and stick it in there while you consider your options.

Where do you have your present current account? The HBOS reward one will give you a £5 per month reward, and you can reclaim the £1.25 tax that has been deducted.

I would certainly recommend the Lloyds Vantage account, you DO NOT need to open another Lloyds account first to get it. It is actually called Classic with Vantage, so you may need to open the Classic then upgrade it, but I got the Vantage straight away. If you have at least £3k at the moment you could open one and get the 3%. You can have 3 Vantage accounts in total.

You could swap the £1k (or 2 x £500, 4 x £250) between Lloyds and HBOS so your accounts get the deposit amount required.

Are you going to be doing any tutoring/lecturing/marking while at Uni? These are quite well paid, so will use some of your tax allowance, and of course boost your savings too.

What is best for you will depend on whether you already have a lump sum saved up, how much you can save in future, and what your long-term plans are for these savings.