Investing overdraft vs Staying in Credit...confused! Watch

bluenoxid
Badges: 13
Rep:
?
#21
Report 11 years ago
#21
Whilst I agree with Snu about the 3% rate being rubbish, I disagree with you about taking out a smaller loan. Even if they make a loss this year, the money will make its money back over the next few years when hopefully the rate of inflation will be lower.

TAKE ALL THE MONEY YOU CAN GET.

It is very rare that you get the full overdraft and the banks can get very touchy over this situation.
0
quote
reply
sonicboooom
Badges: 0
Rep:
?
#22
Report 11 years ago
#22
(Original post by snu)
There are several different indexes used to measure inflation. One of them is the Consumer Prices Index (CPI), which is what the Government quotes at people (currently at 2.4%); the other is the Retail Prices Index (RPI) which is often used in pay bargaining - and also used to define the interest rate on student loans. RPI is currently at 4.4%, and was 4.8% in March.

The student loans interest rate is adjusted on a yearly basis in September, to the rate of the RPI in March of the year. The current student loan interest rate is 2.4% (and has been since September 2006), and you'll notice RPI was 2.4% in March 2006 if you look here (you want to look at the CZBH series). The previous year (Sept 05-Aug 06) it was 3.2%, which corresponds to the RPI in March 2005.

Neither of those indexes include house prices, so a lot of people argue that they're artificially low and don't actually reflect the true cost of inflation in this country.

But anyway, the key point is that 3.75% is a terrible rate for a savings account. Anything less than 5% is a rip-off.
O...k , thanks for clearing that up (sort of lol). I guess its not a great idea to use my HSBC flexible saver, might as well look for an extra savings account.
Also, assuming i get roughly £3,500 loan, i guess around £1150 for the first term(?), how much should i put into savings? Should i put any of my overdraft into savings? I'm obviously going to need money to live on...
0
quote
reply
Lolly-88
Badges: 1
Rep:
?
#23
Report Thread starter 11 years ago
#23
I have another question aswell which is probably stupid but i've already made my self look like an idiot in this thread so i've got nothing to lose. :rolleyes:

How do you take your overdraft out of your account? I have £500 overdraft now with my bank now if i had £30 i took out £50. I would have -£20 if i put 30 in then i would have 10. If with my student account i did that when i put money back into my account...will it not just go towards my overdraft... or can i only pay my overdraft back by going to the bank (.e.g. i take out £1000 of my overdraft to put into a savings account and then i got a credit of £1000 will the balance be 0??) Sorry if that doesn't make any sense.

Also do i have to remove all of my money in my account to get to it?
0
quote
reply
AT82
Badges: 0
Rep:
?
#24
Report 11 years ago
#24
I ISA is 6% AER and I have only made £13 interest on £400(ish) as a general guide.
0
quote
reply
snu
Badges: 2
Rep:
?
#25
Report 11 years ago
#25
(Original post by sonicboooom)
Also, assuming i get roughly £3,500 loan, i guess around £1150 for the first term(?), how much should i put into savings? Should i put any of my overdraft into savings? I'm obviously going to need money to live on...
There is no answer to this question. Put as much as you want into savings. You could put it all into savings and set up an automated transfer back into your current account to give you so much to live on a week, but it's probably best to leave a buffer for unexpected expenses since it can take a couple of days to move money between your savings account and current account (and most decent interest rates are internet-only accounts so you can't withdraw directly from them with a cash card or anything, you have to move money back into your current account first). Or you could just leave it all in your current account and spend away. Or you could do something in between. It's up to you.
0
quote
reply
snu
Badges: 2
Rep:
?
#26
Report 11 years ago
#26
(Original post by Lolly-88)
How do you take your overdraft out of your account? I have £500 overdraft now with my bank now if i had £30 i took out £50. I would have -£20 if i put 30 in then i would have 10. If with my student account i did that when i put money back into my account...will it not just go towards my overdraft... or can i only pay my overdraft back by going to the bank (.e.g. i take out £1000 of my overdraft to put into a savings account and then i got a credit of £1000 will the balance be 0??) Sorry if that doesn't make any sense.

Also do i have to remove all of my money in my account to get to it?
I don't really understand what you're saying. An overdraft just lets you go into negative balance. Everything works the same as normal otherwise, except that overdrafts on most current accounts will charge you interest on the overdrawn balance - student accounts are the exception, and provide you with fairly large interest free overdrafts.

So you open an account and credit it with £50. Your balance is now £50. You withdraw £1000. Your balance is now £-950. You pay in £50, your balance is £-900. You pay in £900, your balance is £0. What don't you get?
0
quote
reply
sonicboooom
Badges: 0
Rep:
?
#27
Report 11 years ago
#27
(Original post by snu)
There is no answer to this question. Put as much as you want into savings. You could put it all into savings and set up an automated transfer back into your current account to give you so much to live on a week, but it's probably best to leave a buffer for unexpected expenses since it can take a couple of days to move money between your savings account and current account (and most decent interest rates are internet-only accounts so you can't withdraw directly from them with a cash card or anything, you have to move money back into your current account first). Or you could just leave it all in your current account and spend away. Or you could do something in between. It's up to you.
Ok, thanks for your help, i'll think about it a bit more
0
quote
reply
Lolly-88
Badges: 1
Rep:
?
#28
Report Thread starter 11 years ago
#28
(Original post by snu)
I don't really understand what you're saying. An overdraft just lets you go into negative balance. Everything works the same as normal otherwise, except that overdrafts on most current accounts will charge you interest on the overdrawn balance - student accounts are the exception, and provide you with fairly large interest free overdrafts.

So you open an account and credit it with £50. Your balance is now £50. You withdraw £1000. Your balance is now £-950. You pay in £50, your balance is £-900. You pay in £900, your balance is £0. What don't you get?
I get it...it's just the same as usual. For some reason i though student accounts would be different in how you get the overdraft.
0
quote
reply
snu
Badges: 2
Rep:
?
#29
Report 11 years ago
#29
(Original post by Lolly-88)
I get it...it's just the same as usual. For some reason i though student accounts would be different in how you get the overdraft.
They are: your bank doesn't charge interest on your overdraft. Normal current accounts have overdraft interest rates of 10-15% or so.
0
quote
reply
Lolly-88
Badges: 1
Rep:
?
#30
Report Thread starter 11 years ago
#30
(Original post by snu)
They are: your bank doesn't charge interest on your overdraft. Normal current accounts have overdraft interest rates of 10-15% or so.
Yeah i know that part what i meant was that i thought that the way you got access to the overdraft was different. Although thinking about it there aren't really too many different ways of accessing an overdraft.
0
quote
reply
Astor
Badges: 0
Rep:
?
#31
Report 11 years ago
#31
My ISA says I can put £25 - £250 a month into it - If I select £35 for 2 months and then bump the SO to £250 can I come back down? Or are there ISA rules i dont know about?
0
quote
reply
snu
Badges: 2
Rep:
?
#32
Report 11 years ago
#32
(Original post by Astor)
My ISA says I can put £25 - £250 a month into it - If I select £35 for 2 months and then bump the SO to £250 can I come back down? Or are there ISA rules i dont know about?
I don't know, you'll have to go and read the terms and conditions of your ISA. This is nothing to do with the general ISA rules, but banks can impose specific conditions on their own accounts. Without knowing what specific account you have, there's no way that anyone could comment on these conditions.
0
quote
reply
Astor
Badges: 0
Rep:
?
#33
Report 11 years ago
#33
(Original post by snu)
I don't know, you'll have to go and read the terms and conditions of your ISA. This is nothing to do with the general ISA rules, but banks can impose specific conditions on their own accounts. Without knowing what specific account you have, there's no way that anyone could comment on these conditions.
It's the Lloyds TSB 8% one.
0
quote
reply
snu
Badges: 2
Rep:
?
#34
Report 11 years ago
#34
(Original post by Astor)
It's the Lloyds TSB 8% one.
Lloyds TSB's Monthly Saver is not an ISA. The conditions that they impose on the account are detailed here.
0
quote
reply
Astor
Badges: 0
Rep:
?
#35
Report 11 years ago
#35
(Original post by snu)
Lloyds TSB's Monthly Saver is not an ISA. The conditions that they impose on the account are detailed here.
Oh I thought the Monthly Saver was just their ISA. So I get my 8% a year, then what?
0
quote
reply
snu
Badges: 2
Rep:
?
#36
Report 11 years ago
#36
(Original post by Astor)
Oh I thought the Monthly Saver was just their ISA.
Nope. http://www.lloydstsb.com/savings.asp has all their savings accounts.

So I get my 8% a year, then what?
From their important information page:

Your Monthly Saver will end on the first anniversary of account opening and we will convert your Monthly Saver to a Guaranteed Tracker (or similar account if that account is no longer available). You will be able to close your Guaranteed Tracker or similar account at any time.

No offense, but this information is all easily available on their web site if you just look for it. You should probably do some research yourself, it's your money after all.
0
quote
reply
Astor
Badges: 0
Rep:
?
#37
Report 11 years ago
#37
(Original post by snu)
Nope. http://www.lloydstsb.com/savings.asp has all their savings accounts.



From their important information page:

Your Monthly Saver will end on the first anniversary of account opening and we will convert your Monthly Saver to a Guaranteed Tracker (or similar account if that account is no longer available). You will be able to close your Guaranteed Tracker or similar account at any time.

No offense, but this information is all easily available on their web site if you just look for it. You should probably do some research yourself, it's your money after all.
So what do you think is better the Monthly Saver I have or their Mini Cash ISA?
0
quote
reply
snu
Badges: 2
Rep:
?
#38
Report 11 years ago
#38
(Original post by Astor)
So what do you think is better the Monthly Saver I have or their Mini Cash ISA?
Define "better". The monthly saver has quite a good interest rate, but has stupid limitations so it's pretty worthless IMO. Whether an ISA or a high-rate savings account is better for you depends on your personal circumstances.
0
quote
reply
WoWZa
Badges: 1
Rep:
?
#39
Report 11 years ago
#39
Investing with ISA is good as it's tax free, and you're pretty much guaranteed around a 4.5 % return (of course this also depends on the index) and it's usually for the amounts mentioned as imposed by the limit.
0
quote
reply
snu
Badges: 2
Rep:
?
#40
Report 11 years ago
#40
(Original post by WoWZa)
Investing with ISA is good as it's tax free, and you're pretty much guaranteed around a 4.5 % return (of course this also depends on the index) and it's usually for the amounts mentioned as imposed by the limit.
If you're earning less than the personal allowance (~£5k), as most full-time students are, then you don't have to pay tax on your savings account interest. You can easily get 5.5-6% on ISAs these days, anyway.
0
quote
reply
X

Reply to thread

Attached files
Write a reply...
Reply
new posts
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

Black Friday: Yay or Nay?

I LOVE a Black Friday deal (261)
45%
Nah, Black Friday is pointless (174)
30%
I don't have an opinion (145)
25%

Watched Threads

View All