'In Credit' Student ... help needed!

emma_marie

I was browsing the MSE website and came across Martin's idea of ‘deficit banking' (i.e. keeping "as big a negative balance within your 0% limit as possible and putting most of the money in a High Interest Savings Account").

As an unusual 'in credit' student myself I found this an interesting idea and began looking into student accounts and savings account and am now very confused!

Student Bank Accounts
I currently have a student bank account and an ISA with Lloyds TSB. This provides a £1,500 interest-free overdraft facility. According to this website Halifax Bank of Scotlands student bank account would be better for me as it offers a much higher interest-free overdraft...which presumably I could then use for the 'deficit banking'.

Savings Accounts
I am confused as to where I should be saving my money. I currently have over £1,000 in an ISA and have not touched my £1,500 interest-free overdraft provided by my current student bank account. Martin's advice above is to use a High Interest Savings Account (the best of which seems to be Kaupthing Edge) but then he also says on the website that Cash ISA's and Regular Savings Accounts should be used before opening a High Interest Savings Account.

I am very confused!!! Should I open a new student account and move my savings or leave well enough alone?!
(...Incase it makes a difference I am coming to the end of my second year of study and work part-time as well).

PLEASE HELP!!!
:wall:

westferret

Depends what you want it for for long term investments go for the isa as long term it's better as you have no tax to pay later on in life. If short term go for the high interest eg sainsbury's bank and get the higher interest and as a student you won't have to pay tax but will do when you go into work.

If you are doing it for the overdraft go for the high interest one as you can take it out easily and pay back the overdraft at the end of your studies.

emma_marie

I earn over the tax-free limit and so do pay tax...forgot to mention this!

JoeA81

In that case, get your £1500 overdraft set up, and then get a load of money into your ISA! Make sure you still leave a good buffer zone in your current account (say go about £1000 overdrawn) so that any direct debits from your account dont make you go over your £1500 limit. A good way to keep your spending seperate from your current account is to put everything on a credit card, then you will be able to pay off an exact amount each month when you get your CC bill, and you can put the minimum into your current account required to pay it off, and keep you close to your overdraft limit.

Just make sure you keep a close eye on everything, and you should be fine. Once you have filled up your ISA allowance, open a Kapthung Edge or similar high interest savings account.

You *could* try and open a new student account with a higher overdraft, but there is no guarantee they will give you the maximum, and changing current account is a lot more hassle than its worth sometimes.

MatchDancer

I'm in a similar(ish) situation.
I am about to go to uni and am not earning so am not paying tax etc.
I'm looking at opening HBOS and taking out the 2750 overdraft (however reading some of the info here, it seems it is uncommon to get the max) and put it into Kaupthing Edge savings (6.5% savings and 6.85% fixed 1year) then open another student account with which I top up with my predicted expenditure at the beginning of each term and use for my living costs etc.

Am I allowed 2 student accounts, one for the whole overdraft and one for my actual finances and which student accounts are the best for being in credit, ie highest intrest rates?
Is there a different account which offers a greater chance of getting a higher overdraft?
If I'm planning always to be in the max od will that mean the od will never increase to its max?
6.50%

foofi22

MatchDancer wrote: »

Am I allowed 2 student accounts, one for the whole overdraft and one for my actual finances

I am not 100% on this (I don't work in a bank and I haven't applied for two student accounts) but I am pretty sure you will only be allowed the one student account.

If you got two (I assume they check this at the application stage?) and it was against the rules you may end up losing both - plus the ability to open any others.

dancingqueen_tr

as far as I know, you are not allowed two student accounts

Lokolo

You're allowed as many student accounts as you want unless its in the banks T&Cs

HSBC write in their T&Cs that you are only allowed 1 student account if you want one with them.

Lloyds haven't got such a thing but meh I still have a student account with them and HSBC, they both automatically upgraded my accounts. However my HSBC student one isn't fully activiated as I haven't said I want a student account (if I did i could get a £1k interest free overdraft, booo, but then again I would have to cancel my Lloyds and miss out on £50 they're gunna give meee).

Parisian

Ohhhh??

I have a HSBC student account. I have banked with them since I was v. young and just converted my standard account into a student account when I started uni... have £1750 overdraft with them I think (could be £2k)

But then, after reading advice here... I opened a Halifax student account in September. On this I have an overdraft facility of £1000. Tried increasing it but was refused, and it is due for review in May...
Didn't realise there might be a prob.... hopefully will be okay?