Special Situation - Advice Needed

fund_manager

Hi Everyone,

I've got a special situation I thought you might be able to advise me on...

I graduated in 2005, and have worked for two years, earning 29k. I am now about to go back into education to train as a lawyer.

I've already applied for the HBOS student account, so my plan is to initially transfer my scholarship into it (to qualify) - which is 7k a year...

I will then take it all out including all the overdraft and stick in someone better interest.. but where? I get the money in two installments of 3k, and it will go down as a balance slowly, as it is for use over the whole year. But it is obviously enough that I don't want it sitting about not gaining any interest.

I've already maxed out my ISA - so I was thinking an instant access savings account like Ice SAVE might be the way forward? (not ICICI because it seems they don't pay the interest monthly...). The other alternative is a unit trust as part of the tax free ISA, but I don't think I trust the equity market to fumble about with that at this point, and its not instant access. So I assume instant access savings are the only way forward?

The other slight issue is that my HSBC Account is a graduate one - the eligibility for that is that you have a job -- does that apply only when you apply for the account? I assume I can just keep that ticking over and use as my transactional account (where I will put about 500 quid in, to live off) and slowly trickle over the 7k + the 2.7k overdraft of HBOS in over time, as it earns interest elsewhere.

Is this possible and is this the best idea? I am a little concerned I am going to get burnt with all the fiddling.. please let me know

Cheers

fund_manager

Can nobody help?

gt94sss2

Just a couple of comments:

1. ICICI do pay interest monthly

2. Student Bank Accounts: All the terms and conditions of student bank accounts I have ever seen always state that this must be your only current account and you must close any other current accounts you have.

3. Re: HBOS Student accounts - I have no personal experience but understand that HBOS don't automatically give you the full overdraft allowance each year and if they notice you are just maxing it out and saving it somewhere else and not using your account otherwise - I doubt they will extend it in future.. (from reports they are a lot more stingy re: overdrafts than the big 4 banks)

Regards
Sunil

Lazy_Runner

I don't know how long your training is going to last, but even if it is 3 years, that is not long enough for a stock market investment. This cancels out the unit trust.

Yes you are right, it will have to be a savings product of some sort.

If your course is more than a year long, you can get fixed rate bonds for certain periods. These may be worth considering.

fund_manager

Lazy_Runner wrote: »

I don't know how long your training is going to last, but even if it is 3 years, that is not long enough for a stock market investment. This cancels out the unit trust.

I am not sure that is right - I held money in the Merill Gold fund for two years and made a killing! (in the gold rush..)