postgraduate trying to save some money

taxipink

I will be receiving a regular loan of £700 per month over the next 12 months whilst I am a studying for an MSc, (I will be a non taxpayer). (I will start paying this back over a period of 4 years, once I have graduated, at a rate of 5.5% including the interest on the year whilst I am studying (ie 5 years worth of interest over a period of 4 years).)
Approx £350 of the £700 will immediately be withdrawn to cover rent and the rest will be used for living costs, I therefore will need easy access. I am looking for the best way to earn some interest but have access to the account at the same time, any suggestions?
I also have £3000 which ideally I would like to be able to access in emergencies but which could be put into a longer term savings account. £2000 of this is already in an ISA earning approx 4% but I would be open to moving it if there were any other options which would help me to earn enough to help pay the interest on my loan!
Grateful for any help, struggling to make ends meet with the budget at the moment!

masonic

If you expect to spend the whole £700 over the course of a month, then it sounds like what you really need is a high interest paying current account (Go here). Moving the money into a savings account and then back every month will be a lot of hassle and you will lose interest while it is being transferred.

For the lump sum, you might want to think about moving it as you can still get rates of around 5% in some savings accounts (if you are brave enough, ICICI pay 5.4%). You are probably not going to finish the course with lots of savings, so there is no real benefit in keeping your money in the ISA as you will be able to move £3000 back into an ISA later to avoid paying tax on the interest when you have to start paying it.

taxipink

Thanks very much, just a quick question, what is ICICI? and why do I need to be brave?!

masonic

taxipink wrote:

Thanks very much, just a quick question, what is ICICI? and why do I need to be brave?!

Martin gives a good summary of ICICI here (and also a rundown of the other top-paying accounts). There is also a lot of discussion about ICICI in this thread. Basically, it can be a bit of a nightmare to get the account up and running. If you feel like going ahead and opening an account with ICICI, the best thing you can do is open the account with the minimum £1 deposit and make sure everything is set up properly (do a couple £1 transfers in and out) before moving any serious money in there.

taxipink

Thank you very much! This has helped me and my mum a great deal!!