Using student overdraft to make money...

Vits2007

Hi, Im just about to start my first year of university and have a plan to make some money whilst im at it:
As you know, students get 0% overdraft, and i plan to exploit this to the full. I have already opened 2 students accounts, and intend on opening at least 2 more, although HSBC says im only allowed 1 student account if im with them. I aim to use the overdraft money to invest in various funds such as the Gartmore China opperitunities fund, the Gartmore emerging markets fund, etc.
I did have a few questions though and was wondering if anyone can help me:
1. Will being £1000 overdrawn for 4 years with 4 banks have an adverse effect on my credit score?
2. Do the individual banks know that I also owe other banks money?
3. Are the various eastern Asia(excluding Japan) and Latin American funds the best places for me to put my money if i want a high return?

Thanks

gt94sss2

I think you may find that the Terms and Conditions of all your student bank accounts will say you are only allowed that account and musn't open any with other banks and if/when the banks realise they are entitled to ask for their overdraft back and can/will close your student accounts.

Do the individual banks know that I also owe other banks money?

Yes, they will all report your accounts to the credit reference agencies - hence a check would tell them you had multiple accounts.

Also if you don't 'use' your account then banks can reduce/remove your overdraft anyway - even if they don't know you have multiple accounts.

Its actually this sort of behaviour which also led to HSBCs (now scrapped) plans to charge for graduate accounts

As for funds, I can't advise on any - just remember high return tends to go along with high risk and volatility .. have you considered a nice, safe savings account instead?

I have to admit doing something similar when I was at university - only one student account but I maxed out my student loans and invested them instead..:)


Regards
Sunil

Lokolo

Hehe just had to reply to this post.

Mother had a go at me when she found out I had applied for maintenance loan, she doesn't want me in debt when I finish. My grandparents are paying for my accomdation and I am getting a job to supply the rest.


However, I have taken it out and I am starting university on Sunday :D my loan is going to come through on the Monday, at which point, I will put it in an ISA which I am going to open.

I have an account with lloyds but they have said, if I don't use my overdraft within the first year, they will give me £50, so fair enough, I think I will not use it for now.... when I get the £50, maybe max it out in another savings account hm.

Vits2007

Student debt isn't as bad as people make it out to be. Although i have to admit that i do have a problem, maintenance loan of £5,180 and tuition fees loan of £3,070, so a total of £8,250 a year, and doing a 4 year masters, by the time 2012 comes, i will be exactly £33k in debt! Wooo!

Sorry to say that a "60 times more interest makes your money multiply" account doesn't take my fancy at all. Even with Alliance and Leicester offering 12% it would still just be £180 on the year.

Nope, i have read the terms and conditions, they don't actually say that you're not allowed others, they just say that it has to be your main student account. Which means that regular university related money has to go into the account. So plan is, government loan/grant goes into account #1, Imperial college grant goes into account #2, salary from a job-yet-find goes into account #3, and account #4...no plans yet. Im jsut hoping that they don't gossip between each other and close all my overdrafts down...

If anyone can see the flaws in my plan please tell!

Lokolo

I think thats a good idea.

I've done a budget planner so I know how much I am allowed to spend each month etc.etc. and If I am under it I can take it over to next month (some of it: 50% saving for rainy day, 50% spend in next month).

Do not get a student account with HSBC, it does say in their terms that you are only allowed one student account.

Um, not much else really. ooo. don't forget, your loan isn't one big lump sum, its spread out like wildfire, just remember the dates you get paid so you can put it straight into savings account.

And finally, a word of warning, try not to get confused with all your different money having all those accounts.....

littlemissmoney

Lokolo wrote: »

I have an account with lloyds but they have said, if I don't use my overdraft within the first year, they will give me £50, so fair enough, I think I will not use it for now

What is your overdraft limit and what is the rate on the highest paying ISA? You can probably make more than £50 in interest.

purch

Remember that this strategy could also mean you are 'Using Student Overdraft to Lose Money'

Lokolo

my overdraft limit currently is £500.

so even if I ge 10% interest thats only £50.

it increases after 6 months to £1000 then at the end of the year £1500.

But as I have the maintenance loan which is £3k, this means my ISA is going to be filled up this year, and if I continue to do the same each year, I will have £10,000 in ISA when I finish (although technically, its also debt - 3 years at £3k and Year in Industry at £1k).

masonic

The benefits of stoozing student loans and overdrafts last quite a while after graduating. So far, I estimate I've made a profit of about £2.5k from grabbing and holding onto unneeded loan/overdraft money.

adidas

Just to let you know I have x2 student accounts, one with Natwest and one with Halifax. Natwest specified I have to pay in my student loan which I do and Halifax say you have to pay in 'grant cheque/student loan' into the account so pay my grant cheque into their account. I didn't want to open another because thought looked better to only have cheques in the account or student loan payments because this is what they specify you pay in.

littlemissmoney

Lokolo wrote: »

my overdraft limit currently is £500.

You need a better student account then! Take a look at Martin's article.