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Investing student overdrafts during studies to earn interest.

I picked this forum because it appears to have the highest volume of active posters.

Has anyone done as the title suggests? I'm looking to get as many student accounts as I can with the highest 0% overdraft limits and then investing the proceeds in better places to earn some interest during my four years of study. Has anyone had any success with this and how long are you usually allowed to stay in an overdraft for before you have to start paying it back?

I'm aware some accounts don't allow you to have more than one student account so I'll stay away from them. Again, anyone done this successfully and can recommend banks etc?

(edited 7 years ago)

Reply 1

claireestelle

Original post by Freddie010

I picked this forum because it appears to have the highest volume of active posters.

Has anyone done as the title suggests? I'm looking to get as many student accounts as I can with the highest 0% overdraft limits and then investing the proceeds in better places to earn my some interest during my four years of study. Has anyone had any success with this and how long are you usually allowed to stay in an overdraft for before you have to start paying it back?

I'm aware some accounts don't allow you to have more than one student account so I'll stay away from them. Again, anyone done this successfully and can recommend banks etc?

The interest rate is so low these days that stooging isn't very profitable anymore. You can normally keep an overdraft for 1-2 years after graduating I think.

Reply 2

username2753518

I've found a few places with rates of 5% so I think if I could get my hands on a sizeable amount of a cash it would be worth it.

Reply 3

claireestelle

Original post by Freddie010

I've found a few places with rates of 5% so I think if I could get my hands on a sizeable amount of a cash it would be worth it.

Well, you could do your credit rating some damage if you go too far.
So maybe you could max one overdraft out and get 5% on that (but bare in mind most of those interest rates are fee accounts or ones where you must put a certain amount in a month .
With my current account for example on £5k i get 4% interest so that is £200 which i suppose isnt a bad profit but your plan involves planning and a bit of effort ( i have multiple standing orders set up to make the best profit possible on my savings ) and you'll have to keep a separate current account for everyday use. So basically you could end up with 3 current accounts with different banks so as not to break t&c's which will all show up on your credit rating, whether that will do much harm or not i m not sure.

Reply 4

PangXie

Claireestelle has some good advice there. I do the same with multiple accounts and standing orders to make the most of my income, but I think the main problem for you as a student is the minimum payment each month. It's often quite high (£1000+). You can bounce your money around once a month to cover it, but that's a bit of a faff when you've got other things to worry about at uni.

TSB might be an option; they offer 5% on up to £2000 if you pay in £500pm. First Direct offer 6% on a fixed savings account (up to £300pm), but with this one you lose the interest if you make a withdrawal inside a year.

I guess I'm wondering if you might end up in an awkward position or wasting your time, if you find yourself short and need your overdraft for living expenses.

Reply 5

username2753518

Yeah I'm thinking ill probably only get one student account which allows me to withdraw up to the current max of 3k. You're right about having to pay in each month which is why I'll probably just add it to my current stocks and shares ISA. Lots of blue chips offering 5% and I reckon if the Donald wins president there will be a great opportunity just like with brexit to buy some great companies at cheap prices due to all the panic. I can afford to absorb a loss and pay back the loan if it all goes pair shaped.

Thanks for your help I think one student account will probably be enough, it's not worth the hassle for more.

Reply 6

niteninja1

TSB give 5% interest up to £2000 and your money is protected by fscs

(edited 7 years ago)

Reply 7

username2753518

Original post by PangXie

6%? Ill go and have a look at First Direct. Sorry I didn't respond before, you were typing your post out as I was typing mine and I totally missed it.

Original post by niteninja1

Tab give 5% interest up to £2000 and your money is protected by fscs