Bank Loan Stoozing

radio345

I had an idea on a variation of credit card stoozing….bank loan stoozing.

As an example, borrow £15,000 over 2 years and pay £960 in interest. Invest that £15,000 in a high interest bank account and receive ~£1390 net interest over the same time period. Giving you a profit of ~£430.

There may be better ways of investing the loan amount, eg offset mortgage, ISA’s. What are your thoughts?

YorkshireBoy

radio345 wrote: »

What are your thoughts?

The £664 monthly repayments (at 5.9% APR) will make a heck of a dent in your savings account balance. So much so, in fact, that your average savings account balance will be around £7,500.

Back to the drawing board?

nomoneytoday

radio345 wrote: »

As an example, borrow £15,000 over 2 years and pay £960 in interest. Invest that £15,000 in a high interest bank account and receive ~£1390 net interest over the same time period. Giving you a profit of ~£430.

But after month 1 you won't have £15000 in your savings account to earn interest, as you will be paying off the loan.

Assuming flat rates on both you would have £695 net interest earnt, and pay out £960 of interest..

Sorry

jamesd

If you can borrow at a lower interest rate than the after tax interest on the savings account this can work but the interest rate margin will usually be under 1%. 1% on 15,000 is just 150 a year in profit. Less on average over two years because of repayments of the loan.

If you have the credit available it's a fair enough idea. Zopa's C market at some risk or regular saver accounts may make it more profitable.