Choosing accounts for piggybanking and savings - Longish

Muzhik_2

Hi all! Long time lurker, first time poster, hope someone can help me with my conundrum!

Some background on myself. I'm a student on an NHS sponsored course (this is my second degree and I'm in year 2), this means all my tuition fees are paid and I get a living allowance each year, plus I have a part time job, and between years 3 and 4 I have a hospital placement for a year which means I will be getting a proper wage. This means I will never be overdrawn (I sincerely hope!) I currently have a £1000 loan from my mum but am hoping to pay that back by Nov since I already have the money, but I will need it to cover food until I get my first payment from the uni (if that makes sense?) I also have a small inheritance from my recently deceased grandfather (under £1000); I don't want to touch it but still want access to it in case my grandmother needs it back for anything.

So this all means I have a small amount of money to stash now (having already paid a third of my rent and bills for the year) even if it's temporary, and will have some money from the uni each month and wages each month, but probably not enough to put into a regular saver unfortunately

I currently have an HSBC Current Account and an inactive Cash ISA. I know I don't have much but I'd like to keep it safe and earn a little interest if I can. I was thinking of keeping a small monthly amount of money in the Current Account I already have for bills, food and day-to-day items (especially since everything is already set-up) and then having two more accounts; one account to save up rent payments and the other to hold all my personal savings from wages and hopefully from my monthly budget. I've read the guides for students, savings, ISAs and regular bank accounts and have to say they were all great but I'm a little overwhelmed, to be honest!

Should I apply for Gross Interest since I won't earn enough to be taxed? Is it better to be paid monthly or annual interest, or does it not make much difference? Are the Halifax Web Saver Reward and Post Office Online Saver accounts good choices for my purposes? If anyone has either of these, can I withdraw from these accounts without incurring hidden penalties? How are these institutes security and service-wise? With such a small amount and since I am under the tax bracket anyway, is an ISA worth looking into? Am I even in the right ballpark with these questions?

I sincerely appreciate anyone who can take the time to look through this and can offer me some advice! :T

hermante

The HSBC regular saver allows monthly payments as low as £25, but the rest of HSBC's savings accounts are rubbish.

You might as well apply for gross interest. It can be done in a few clicks with HSBC and the Post Office esaver. The problem with the Post office is is that it takes at least 3 days to send money in and out, so you might be better off with the Halifax web saver.

You need to try to get the Halifax student account and/or the reward current account. The student overdraft is interest-free so if you can get it, take advantage of it as extra savings. Since you say you don't need an overdraft, you shouldn't get into any trouble if they want you to repay it.

Use the inheritance and some of your mum's loan / your own money when you have enough to accumulate £1000. You can use this to move in and out of Halifax each month to earn the £5 reward from the current account. This also ups your web saver rate to 3%.

ISAs are always worth it if you're not going to withdraw, because the aim is to build up the balance each year so that when you do start earning more, you won't have to pay tax on all of it. If you want to access the money then there isn't so much point.

Muzhik_2

Thanks for your reply hermante!

I was a bit unsure about stoozing. Do you basically take the overdraft limit out of the student account and stick it in a savings account?

If I had the Halifax web saver and a reward account, and just swapped the £1000 between the two, wouldn't Halifax catch on and stop me from doing that? Would the money need to stay in the reward account for a set amount of time before I could put it back in the saver?

I think for now an ISA is probably not worth it for me until I'm more financially stable, maybe later in the year when I have a steady rein on things. This is a silly question I know, but if you had more than one ISA, could you put the yearly limit into each one, or would it have to be split between them (i.e. £5340 x no. of ISAs or £5340 total)?