Savings Advice for a Graduate

JoshuaOrr

Hi all,

First post and I'm not sure if this should be here or in the debt forum but I think it's more savings related - let me know if it should be moved!

I've just finished university and am currently making use of the free overdraft with my Halifax student account. Without going into too many details I'm slowly clawing my way out of it - each month I earn about £100-£150 more than I spend which chips away at it. However at the start of this month before I got paid, I was £750 overdrawn, so it'll still be a while before it's all cleared. I get an interest-free overdraft facility with the graduate account I'll be switched to in September so I don't need to worry about being charged for being overdrawn or about interest building on the debt (my current limit will be reduced but that shouldn't be a problem).

I was wondering if I might be better off putting little chunks of the money (£100 a month or so) in an savings account to let it build up so I can pay off the overdraft in one fell swoop once I have enough in savings? I thought if I'm actually getting interest on the money instead of letting it sit in the red it would help me pay it off a quick better. If so, what type of account should I get/who with? I am woefully ignorant of finances and banking and the like so any and all help would be really appreciated!

Thanks in advance

xylophone

Why not save into a cash isa?
http://www.moneysupermarket.com/savings/cash-isas/?gclid=CPHI_7y3iLACFSYhtAodNxCEOg&source=GOO-131774AD&p=0&keywords=best+cash+isaExact&ef_id=TKI1yAqoEGQAAHIBs24AAAzI:20120517230509:s

psychic_teabag

If you pay no interest on the overdraft, then as you say, there's no benefit in paying it off early, so may as well earn interest on your surplus money. See http://www.moneysavingexpert.com/savings/pay-off-debts#save

Could it help your credit rating to be seen to be paying off an overdraft ? Or hurt it to just have it sat there not shrinking ? Not something I know much about myself.

atypical

psychic_teabag wrote: »

Could it help your credit rating to be seen to be paying off an overdraft ? Or hurt it to just have it sat there not shrinking ? Not something I know much about myself.

I've maxed out my interest free overdraft for the last 4 years (in a savings account). It doesn't appear to have affected my ability to get credit.