Investing with student overdraft?

philip1427

I am starting university next year and have been offered a 3000£ fee and interest fee overdraft for the duration of my course. I know for a fact I will not need this overdraft, however is it possible to withdraw money from the account going into 'minus' and putting it into a savings account with a bit of interest and make some money?

jonesMUFCforever

Yes that is a good idea but you won't get much interest.
Remember to pay in a nominal amount into the bank account every term to stop them thinking you have done a runner and pulling the overdraft.

Also please do not invest in things like shares as these should be done with a long term thinking of 5 years minimum.

philip1427

I suppose is it really worth it for an extra 60£ income a year?

realaledrinker

Who is offering a £3000 interest free overdraft in Year 1???

Westie983

Check out the replies on your other post, where this question has been answered...

https://forums.moneysavingexpert.com/discussion/5514396

Westie983

realaledrinker wrote: »

Who is offering a £3000 interest free overdraft in Year 1???

Doable but you have to be earning a wage on top of any finance you may qualify for.

Westie983

philip1427 wrote: »

I suppose is it really worth it for an extra 60£ income a year?

Yes if it a three or four year degree, and the bank offers the gradate account after the student account which gives you another 2- 3 years, so could be up to seven years of interest free money, being saved into an interest paying account.

Ben8282

I don't approve of this idea at all.
If you believe that putting £3000 into a savings account for a year will earn you £60 interest then you are living in a dream world.
It is unlikely that your current situation would give you access to the sort of current account that would pay you this level of interest or more.
Stoozing is for those with long stable credit histories and high credit limits and is inappropriate for you.
Also consider the effect on your credit history of your actions.
You presumably have little or no credit history. You are given an overdraft facility and immediately max it out. Consider for yourself just how that will look .....

TartanSaver

I've been doing it for 3 years, and it's not stopped me opening multiple current accounts for bonuses and better interest. Nor has it stopped me taking out credit cards. £3000 can easily earn £150/yr if you use TSB and nationwide at 5%. More if you have a 6% regular saver with one of the HSBC flavours!

Your presumptions about students appear to be on the highly flawed idea that we're all 18 straight out of school. Even then, there is no reason not to do this. The simplest thing to do is not use that account other than for a regular pay in (eg student loan) which you transfer out, and never spend from the account. As long as you don't spend the overdraft money, this is a good strategy.

Westie983

I too did this with 2 student accounts (whoops) and I have not had a problem opening accounts or credit cards, I managed to save 13k in my student years with fours years of student finance and the overdrafts, the key is to pay it back when they ask you too.

The year I graduated I got told that I had 2 years to pay off the overdraft and in the second year they stated to charge for half of the overdraft, so I paid that bit back till I had paid it all off by the time the 3k was 100% chargeable. I then closed my account.

This said it had not stopped me opening accounts but I now work in bank so that may help, using your student overdraft is no different to snoozing from a credit card, as long as you have the payment to pay it off by expiry date, having the self control to pay in money each month or quarter. and do nothing else.

It can work in peoples favour, I agree with you Tartan, you just don't know how old the student is, I was 25 when I went into higher education.