ISAs - student savings accounts

Even that rare student breed, those likely to be in credit, can still profit by opting for the student account with the biggest 0% overdraft, and use a budgeting technique called ‘deficit banking'.

The premise is to keep as big a negative balance within your 0% limit as possible and put most of the money in a High Interest Savings Account.

If you are able to do this then an ISA is just about the best instant access savings account available at the moment, although with the current base rate at a record low even ISAs aren’t what they used to be.

The important thing to remember with an ISA is that you can only deposit £3,600 per tax year (April – April) it doesn’t matter if you deposit £1,000 one day and the next day you take it back out, you will then only be able to deposit another £2,600 for the rest of the year, so although the account is instant access you do need to be careful with your deposits.

Opening an ISA

When opening an ISA you should be looking for the ISA which offers you the highest interest rate (obviously!) and this will usually come via some sort of bonus that the account will offer for the first year.

Once the bonus period is over you should look to move your ISA to a new account with a new interest bonus. Even though you can only deposit £3,600 a tax year in to an ISA you can transfer previous years balances from one bank to another.

This has to be done through the banks rather than you just taking the cash out of one account and then telling your new account you have £X from an old ISA, the account providers have a legal obligation to speak to each other to transfer the money.

Don’t worry about this, all you have to do is fill out a form.

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