Saving in high interest rate accounts

petelangfield

Hi, i am a student and have an overdraft on a bank account which i want to invest somewhere. I've looked around for good rates of interest but i find the high rates require you to earn and save over a certain amount every month.

I have a sum of around £1500 to invest and i want to know if i can put it in one of these high interest accounts and keep taking it out and putting it back in at the end of the month as if it was wages. I don't know much about the accounts so this may just be me being naive.

Is it against any bank terms and conditions?
Would i be taxed as if it was an income?
Would i earn the high rate of interest doing it this way?

Thanks,

Pete Langfield

Aegis

Look into ICICI, Icesave and Sainsburys accounts. There shouldn't be a minimum earning requirement for those.

Generally the minimum earnings are for high-interest current accounts rather than savings accounts, so you should be able to get 6.3% AER or thereabouts. Remember to ask for an R85 form so that you can have your interest paid gross instead of with 20% withheld for income tax (i.e. 25% more than you'd get if you just allow them to pay that interest as they'd normally do).

If you're planning on saving in the long run, you could save yourself a little hassle and drop the money into an ISA, but at this stage you might find that it's not too important to get the tax-free status there simply because you should already be able to claim your interest tax-free unless you're earning a lot more than I was as a student!