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Interest-fee overdraft into savings account - Wise?

I was wondering whether it is economic to go max overdraft and place it into a separate savings account considering that student maintenance loans accumulate interest from the day they're paid in, and when they're paid into the account they wipe out the overdraft from the account... So you're essentially paying your student maintenance loan into a savings account. Basically, what I'm getting at is whether the in-credit interest you'll be gaining from the savings account is outweighed by the interest from the student maintenance loan? Which takes priority? Should you focus on paying back the student maintenance loan moreover gaining interest from the 'interest-free overdraft'?

Ah, I don't know if any of this makes sense... I've gave my best shot at explaining.
Isn't student loan interest 3% + base rate or something? So any savings account needs to be in excess of that. I believe you will struggle these days. Even Santander has reduced its 1 2 3 account. That said, if you treat your loan as a graduate tax it isn't worth worrying too much about it.

Good luck!
Original post by ByEeek
Isn't student loan interest 3% + base rate or something? So any savings account needs to be in excess of that. I believe you will struggle these days. Even Santander has reduced its 1 2 3 account. That said, if you treat your loan as a graduate tax it isn't worth worrying too much about it.

Good luck!


I was wanting for someone in a similar position to mine to have done all the hard work for the both of us. I guess I'll have to do all the number-crunching myself, thank you for your reply. Also, what exactly isn't worth worrying too much about?
Original post by postexamtalk
I was wanting for someone in a similar position to mine to have done all the hard work for the both of us. I guess I'll have to do all the number-crunching myself, thank you for your reply. Also, what exactly isn't worth worrying too much about?


Its not hard. I got the interest wrong though. Current student loan interest is RPI + 3% i.e. 3.9%.

http://www.slc.co.uk/services/interest-rates.aspx

Best savings accounts are here:
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

You could do it, just. You would have to open two or more accounts with Nationwide at 5% for £2500 and TSB at 5% for £2000. But they will probably insist you pay in a set amount each month (more faff) and also have direct debits going out. The best regular savings account is Shawbrook Bank at 1.1% for instant access or 1.8% if you are prepared to lock your money away for a period of time.

Given that 1% pays £10 on a £1000 balance, I reckon you are better off scanning the streets for lose change than invest your student loan.
Original post by ByEeek
Its not hard. I got the interest wrong though. Current student loan interest is RPI + 3% i.e. 3.9%.

http://www.slc.co.uk/services/interest-rates.aspx

Best savings accounts are here:
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

You could do it, just. You would have to open two or more accounts with Nationwide at 5% for £2500 and TSB at 5% for £2000. But they will probably insist you pay in a set amount each month (more faff) and also have direct debits going out. The best regular savings account is Shawbrook Bank at 1.1% for instant access or 1.8% if you are prepared to lock your money away for a period of time.

Given that 1% pays £10 on a £1000 balance, I reckon you are better off scanning the streets for lose change than invest your student loan.


Again, thank you for your reply sir.

Hmm, that does sound like a bit of an unnecessary hassle. Would the 1% pay £10 per annum? If so, I second your final statement.
Original post by postexamtalk
Again, thank you for your reply sir.

Hmm, that does sound like a bit of an unnecessary hassle. Would the 1% pay £10 per annum? If so, I second your final statement.


Yes. Just £10 for a year. There are people who take advantage of current account bonuses by having standing orders to bounce money back and forth, but it really is more trouble than it is worth.
You could invest the money, but you need to accept that you might lose some of it and that it probably needs to be out of reach for several years. If you can afford to put it in a savings account for a year, I wouldn't bother.

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