Which savings account for Students

internetpig

My daughter is going to University and has got her paperwork all sorted.

She has been working part time and has generated a little bit of savings (approx. £4k) to help her through her university time.

What should she do with these savings ?

ISA ? Some form of savings account ? something else connected to Uni ?

Thanks for any advise.

Porcupine

Does she pay tax? Is she likely to still have the money when she starts paying tax?

If she doesn't pay tax and isn't likely to keep the money when she does, just pick the highest rate account, ISA or ordinary savings account.

If she does pay tax or might have the cash when she does, an ISA is probably worthwhile, because you lose a fifth of the interest in a non-ISA account to the taxman.

You can get some higher rates at the moment by doing crazy things with ordinary current accounts, but she might not be eligible for those as a student on a low income. On the other hand, student current accounts sometimes pay a higher rate of interest anyway - worth checking.

internetpig

Ended up with a Tesco ISA at 2.3% with immediate access. Seems ok.