Multiple student accounts are overrated!

FreePnp.com

I hate to be a bit of a kill joy, but opening multiple student accounts for the purpose of investing the interest free overdraft in a high interest account earns you much less than you may think.

You'll get a maximum of around 4.50% net, so in theory a £1000 overdraft will earn you £45 per year for one account.

Unfortunatley this is untrue. The rate of inflation is currently around 2.5%, so in real terms you will only be earning 4.5-2.5= 2% or around £20 per year, less than half the original figure.

I'm in the process of trying to open five student accounts as its money all the same, but don't be mislead by the amounts that you think you can make!

N.B Of course if you can utilize any of the banks freebies well and good, but Natwest and HSBC apart, they seem to be terrible this year!

johnllew

Unfortunatley this is untrue. The rate of inflation is currently around 2.5%, so in real terms you will only be earning 4.5-2.5= 2% or around £20 per year, less than half the original figure.

A bit dubious this argument. If you didn't have the money to invest, you'd be 2.5% worse off each year!

Robert_Sterling_3

Start transferring it to Abbey at 7% or Halifax or even Abbey & Halifax

andrew_b6k

if you spend your loan, spend your overdrafts instead of your student loan, then you can pay back the overdrafts using the loan when you graduate and the bank demands the money back, whilst paying off the loan at just the rate of inflation. ;D

FreePnp.com

The Abbey account unfortunately goes down to 5% after one year, and if you touch your money or don't keep up payments, it drops down to 1.25%!

Alas!

Regarding Johnllew, what you said makes little sense! If you don't have money to invest then you loose nothing, but if you do have money to invest, you nearly always have to subtract the rate of inflation to get a good idea of you products, unless what you eventually purchase has for some reason been untouched by inflation!

Robert_Sterling_3

Johnllew in my opinion makes a lot of sense and that is putting it mildly.
On this matter you are aware, as Johnllew is too I am absolutely sure, that having more money is not the same thing as having more purchasing power.
That notwithstanding if you have x pounds and you can increase it to x + n  pounds for any value of n >0 then you will be better off with the extra n pounds than without it.
In my humble opinion anyway.
Even better if you can make it 2n or even 3n.

P.S.  As a result of reading  to Johnllew's posts at another site I now have about £14,000 pounds on loan to me at 0% earning a taxable £60 per month for which Ta very much Johnllew.

PPS I only read the posts in June 2004.

crana9

The Abbey account unfortunately goes down to 5% after one year, and if you touch your money or don't keep up payments, it drops down to 1.25%!

you can transfer the money after a year if there's a better deal, and there's no point in signing up for it unless you are 99% sure you won't need to touch it and you will be able to keep up payments. so..