Short term student savings

PotatoAndAlsoPotato

Hi everyone,

First post, so please go easy.

I took some time out of university as I got ill. This meant my student grant was accidentally overpaid. I got a letter saying I could pay back the overpayment by cheque, or they'd just take it out of my next instalment. I figured I could just put in a fixed rate savings account so I can't touch it but can also make interest? In addition to this, I have some money which I know I'm not going to spend over the next few months as my expenses are quite low as I'm living at home and I have some spare cash from part-time jobs and internships and what not. So in total the money I want to save is about £2000.

I go back to university in January, but if I keep some of the money I could put it away until March, so I could take advantage of six month long savings accounts. However, I'm not sure where exactly I should save my money. Should I be considering ISAs? Since I'm a student, even with my part-time jobs, I haven't reached the personal income tax allowance, so I don't think I pay any income tax so I'm not sure whether it's worth it. Should I consider splitting my money between less risky places like savings account and more risky things like peer-to-peer lending? Or am I just overthinking it as I'm unlikely to make much anyway saving a relatively small amount for a very short period?

Would appreciate some advice!

Beano123

I'd just stick it in a high interest current account. TSB Classic Plus offers 5% for up to £2000. The only minor problem is that you have to pay in £500 per month to get the interest. Simple solution is to just cycle £500 of the £2000 in and out or to cycle an extra £500 through it.

That's probably your best return.

ISAs - only really good for the long term or maxed out current accounts tbh. You probably won't find an instant access ISA paying more than ~1.5%. A much lower rate of return even if you where paying tax. If you can't get a high interest current account then an ISA would be your best alternative.

Peer to peer I don't know much about but it sounds like far to much effort and risk for a not much greater return than using the TSB account.