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Depositing overdraft in savings account? Watch

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    I heard this from some people but don't know how it works. Apparently students take out maximum overdrafts even if they don't need ot frlm one bank and then place it into savings to earn money on it. Does this actually work? I looked it up amd got gibberish about ISAs and AER...

    Have no idea what they mean

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    An ISA is an individual savings account which you can earn tax-free interest on and is relatively higher compared to other savings accounts. AER is annual equivalent rate and is the rate of interest you will earn as an annual rate.

    Yes it does work and is very simple. People take out the whole overdraft, since student overdrafts are at 0% interest rate, and put it into a high interest ISA to earn money. It isn't a huge amount but it's something.
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    (Original post by lala121)
    I heard this from some people but don't know how it works. Apparently students take out maximum overdrafts even if they don't need ot frlm one bank and then place it into savings to earn money on it. Does this actually work? I looked it up amd got gibberish about ISAs and AER...

    Have no idea what they mean

    Posted from TSR Mobile
    This does work as described above. You just have to be careful bouncing around your overdraft limit as if you go into unplanned overdraft you will be fined by your bank, enough to wipe out any interest earned!

    Also make sure that the conditions of your ISA suit your needs, some of them require you to lock your money in for a period of time and you will lose interest if it is withdrawn before this time.
 
 
 
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