Advice on what to do, money into savings and use OD, or not?

GoldenShadow

I am a full time student until about January 2014. My finance got messed about a bit, but, by some fluke Student Finance have fixed it and I now have more money than I was anticipating to see me through to the end of my studies.

I work 15.75 hours per week and my monthly outgoings are relatively small. My Mum charges me no rent etc so very lucky in that respect. I give myself £40 a week to buy groceries/dog food/random bits and pieces. The rest all goes into a savings account for xmas presents/rainy day fund.

Right now in an ISA I have 3K. I just put 1K in from the money Student Finance have given me, and I am a couple hundred £'s away from using my overdraft. Basically, between now and Sept I will get another £1400. I don't know whether I should:

A) Put £1000 in my ISA to make it up to 4K and put the £400 into savings
Put £2000 in my ISA so that I am in my interest free student overdraft of £1250 by about £600 (so still having £650 if I have any dire financial issues crop up)
C) Not put any in savings and avoid using my overdraft completely at any cost

I'm 21 and my OH 24. We are desperate to get on the housing ladder at some point int he next five years hopefully, and both our credit ratings are currently fair. I've started buying stuff on my credit card then paying it off a few days later, but basically I don't want to rely on my overdraft for a bit if that will look particularly bad. In the same breath though, it is interest free...

Car just had its MOT, tax not until July etc etc. Realistically with no unexpected bills I should be able to live off just my wages anyway.

Any advice on what I'm best to do?

HappyMJ

Personally I'd go with Option C but Option B is certainly attractive...as long as you are happy with it.

When using the credit card use it as much as possible for everything you can and pay it off in full on the due date (rather than a few days later as you said). You need the balance to be reported to the credit agencies and your roll over balance is zero then they won't even know you have used the card during the month.

GoldenShadow

HappyMJ wrote: »

Personally I'd go with Option C but Option B is certainly attractive...as long as you are happy with it.

When using the credit card use it as much as possible for everything you can and pay it off in full on the due date (rather than a few days later as you said). You need the balance to be reported to the credit agencies and your roll over balance is zero then they won't even know you have used the card during the month.

Thanks, can't lie I am seeing Option B as rather attractive too..! To be fair I should be able to do option A, put 1K away when I get the £1400 and still not use my Overdraft, my ISA isn't an amazing one as in I can transfer money out at any point if I do have issues to be fair. Need to look at applying for a better one I think.

I've only been using the CC for about two weeks, had it about two years though!! I can't even remember any of the details for it to know what the interest rate is or how long I have to not pay it off to accrue it, I should really find out...

Thanks for the reply

ETA: I just have an HSBC Student CC with £500 limit, so if I spend money on it, I will get a statement saying I need to pay X amount before Y in order to avoid charges? As in, I wont wreck my financial life by waiting for a statement before I pay it off? And that will be better in terms of credit file in the future?

Sorry, I am completely new to all this, decent enough at managing money just want to improve credit rating whilst I can.

phona

Hi,
I'm a full-time student too. My current account is constantly overdrawn and I keep that borrowed money in a savings account. As long as the money is saved, and hence still there, I can clear my OD any time. Since it's interest free, this is a pretty sensible thing to as long as you can trust yourself not to spend the money. From what you said, you seem to have more financial sense than many students!

As for the credit card, I had a quick look at the HSBC site and it seems fairly similar to mine. Assuming you use the online banking, you should be able to view statements online and they will say the payment date on them. As long as your payment reaches your account on/before that day you won't damage your credit file. Also, if you pay the full amount shown on your statement on that day, no interest will be charged.

agrinnall

If you know you'll always have the money to pay your CC off in full then the easiest option is to choose to pay the full balance by direct debit, then you don't have to worry about when to pay it off - but you do need to ensure the money is in your current account otherwise you'll get hit with an unpaid DD charge.

And while this may not be possible while you're a student, if you are making all purchases on a CC it's a good idea to get a chasback one so that you're making some money while using it.