Advice for a student saver

Skimftw

Hi All,

I have some money saved from my student loan for the last 2 years, and I finally decided I should put it in a savings account.

I am just bewildered by the range of products that are out there! I don't pay any tax as a student, so perhaps a instant access saving account is the best? I am really just not very sure. I would consider a fixed rate saving account, perhaps to put some money in, and to keep the rest in an instant access account in case I need it to hand at some point.

I would be grateful for any advice.

unimaginative_user_name

Well done for saving some of your grant!

Do you mind me asking how much we're talking about here? My guess is that the high interest paying current accounts wouldn't work as you might struggle to make the regular payments needed each month to receive the interest. However if you can pay in £500 a month and are willing to go paperless you could get 5% in the TSB on up to £2000. You could pay in the same £500 a month if you see what I mean. Deposit what you can afford as a lump sum and then set up a standing order to transfer £500 into the TSB one day and another to transfer it back again the next day.

Unless you're talking about a lot of money fixed rates are probably to be avoided as you won't be able to access the money for the whole of the term. It would be frustating if you ended up going overdrawn in the event of an emergency when you had money tied up in a fixed interest deposit.

As for instant access savings (if the TSB option wouldn't work) just check the banking and savings section of the main site for the best rates at the moment and be prepared to switch if the rate drops.

Skimftw

Thanks so much for your great reply! I think I have about £3000-3500 that I'd like to save.

Also I had no idea that you could just transfer the money in and out like that for the interest! That sounds amazing, and those current accounts are definitely an option that I'd like to consider.

So you have a suggestion on which one to go for? I'm thinking specifically the Santander account or the TSB one that you have mentioned.

Also how likely am I to be accepted for this kind of account as a lowly student?

Thanks again!

unimaginative_user_name

You credit history will be checked and they will ask for details of your monthly income. I am a lowly homemaker (!) although I also have a certain amount of income from savings and don't have any debt. They accepted me without any problems. It may have helped that I didn't ask for an overdraft facility. I doubt they would have wanted to lend me any money but that suits me fine!

The Santander one might not suit you quite so well as you only get the top rate on balances over £3000 and you have to have two direct debits which may not suit you. I think there's a monthly charge too. I personally don't like the idea of having my savings in the account I use for bills and other expenditure as I'm not sure I'd have the discipline not to dip into my savings. The fact that I can leave my TSB debit card at home means that I'm not tempted! However if you've saved this amount from your grant you are obviously quite a disciplined person.

Skimftw

I totally know what you mean about the being tempted to dip into the savings! That's why I'm not sure whether I'd be prepared to completely switch accounts to get the £100 bonus for the TSB account, and it seems like a lot of hassle too.

Just thinking about direct debits, I have a phone bill, can you think of any other things that I could have direct debits on?

Oh also if I move £500, does it count? So would I keep £2000 in the account, and move £500 in and out in order to get interest, or could I keep £1500 and then move the 500 and still get interest on £2000?

Sorry for all of these stupid questions, I have literally no clue on any of this stuff but I think I'm getting to understand it thanks to you!

Eco_Miser

Skimftw wrote: »

Oh also if I move £500, does it count? So would I keep £2000 in the account, and move £500 in and out in order to get interest, or could I keep £1500 and then move the 500 and still get interest on £2000?

You earn interest each day, on the cleared balance at the end of the day (or just £2000 if the actual balance is more).
Therefore, you should try to keep the balance at £2000. Transfer £500 out and back in the same day to meet the pay-in requirement (or move £100 five times, or any other combination totaling £500 or more a month).

There are lots of threads here about maximizing interest from current accounts, and about meeting direct debit requirements (Tesco). Have a read of them, then come back if you've any specific questions.

unimaginative_user_name

Landline bills, gas and electricity and mobile phone contracts are the most common. Personally I also pay for contact lenses, car maintenance, magazine subscriptions and my credit card bill by direct debit although the fact you've saved as a student might mean you've not got these luxuries. If you are struggling to find a second direct debit even £1 per month to a charity would be worth it in order to meet the account's terms and conditions in order to receive the interest. Don't forget to complete a R85 for each account which means that your interest can be paid tax free and means you won't be paying £20 to the government on every £100 of interest you earn.