Could I invest my Lloyds overdraft to a savings acc?

trikidy

Hello, wondering if anyone can shed some light on my idea.
I'm at University and have a student account with Lloyds, the overdraft is in the region of £1,000. It is no fee and no interest, so I only pay back what I use. This is for the next year, upon which at the end of my university course my student account disappears or gets changed into a different type of account I am guessing. So while I have the £1,000 ish overdraft sitting their doing nothing, could I put this into a savings account and make interest on it, then when my course is finished pay the OD back and made a bit of money- not alot!

Would this be allowed?
Would it affect my credit to be in an overdraft?
Would my bank care?

Thanks for your help!:p

InsideInsurance

Yes its allowed

Yes it would show on your credit reference - probably be considered negatively. I had something similar and speaking to an underwriter after a decline for a card they were concerned that there was a maxed out overdraft even though the overdraft was interest free. I did get them to reverse their decision when sending statements from savings (that dont show on credit reference files) that were many times that of my overdraft

Does it matter if they care?

BugsyBrowne

Your internal scoring would be trashed with lloyds and for the interest you would earn on a lousy grand is not worth it.

trikidy

BugsyBrowne wrote: »

Your internal scoring would be trashed with lloyds and for the interest you would earn on a lousy grand is not worth it.

Okay thanks for that, I see you've been a manager of Lloyds so you know what you're on about. What helps boost internal scoring at Lloyds?

Think I will just leave the overdraft, seems a waste though!

CLAPTON

BugsyBrowne wrote: »

Your internal scoring would be trashed with lloyds and for the interest you would earn on a lousy grand is not worth it.

I've no real idea if this is in fact so; it seems unlikely as why would banks offer free ODs?

certainly lots and lots of student do indeed take full advance of their free OD and many of them save to earn a bit of interest.

indeed many free ODs last for a couple of years after uni ends and gradually reduce.

trikidy

CLAPTON wrote: »

I've no real idea if this is in fact so; it seems unlikely as why would banks offer free ODs?

certainly lots and lots of student do indeed take full advance of their free OD and many of them save to earn a bit of interest.

indeed many free ODs last for a couple of years after uni ends and gradually reduce.

I did think that being in an overdraft would be bad, so it could be plausible that your scoring internal thing would be really bad. But I don't know.

CLAPTON

trikidy wrote: »

I did think that being in an overdraft would be bad, so it could be plausible that your scoring internal thing would be really bad. But I don't know.

in general living in an OD is bad for credit applications but it's generally accepted that free OD for student are counted differently.

Indeed the purpose of offering free ODs is to attract student (the future graduates).

I've always adviced my own offstring to clear their free OD once they were earning and long before they were considering applying for mortgages.
I'ld also say that having the OD didn't affect any credit applications they made for CCs.

trikidy

CLAPTON wrote: »

in general living in an OD is bad for credit applications but it's generally accepted that free OD for student are counted differently.

Indeed the purpose of offering free ODs is to attract student (the future graduates).

I've always adviced my own offstring to clear their free OD once they were earning and long before they were considering applying for mortgages.
I'ld also say that having the OD didn't affect any credit applications they made for CCs.

Interesting, of course I wouldn't be spending the money so could easily just transfer it back.

I may just ask in branch if it will affect my rating being overdrawn for a long period of time, because it does make sense that student accounts may be on a different system... or something!

Sharon87

I'd say go for it. Any negative impact on internal credit rating will be temporary. Just remember to always pay your student loan into the account and is part of the terms and conditions usually for student accounts.

May as well earn some money on it! Credit scores only matter if you want to apply for credit. So if you want any credit apply before you move it. And if you need money, you dont need to apply for a CC as you have OD.

Lots of people get 0% balance transfer cards and stick that money to savings. So it's not uncommon

BugsyBrowne

Sharon87 wrote: »

I'd say go for it. Any negative impact on internal credit rating will be temporary. Just remember to always pay your student loan into the account and is part of the terms and conditions usually for student accounts.

May as well earn some money on it! Credit scores only matter if you want to apply for credit. So if you want any credit apply before you move it. And if you need money, you dont need to apply for a CC as you have OD.

Lots of people get 0% balance transfer cards and stick that money to savings. So it's not uncommon

I take it you do know how much interest the OP would earn on a grand with today's rates?

jonesMUFCforever

Being a student means most banks EXPECT their accounts go overdrawn.
Put the money into an ISA taking care not to go one penny over your o/d limit.
To make sure your internal credit score is not trashed just transfer the money in and out of the account once a quarter.