Investing a student overdraft in a mini-ISA? Help please?!

Kristoph · 30 Jan 2008 at 00:44

Hey, I've just been looking at investing £2000 (if NatWest are happy with letting me borrow this amount) into a mini-ISA.

Quick question:

http://www.natwest.com/personal02a.asp?id=PERSONAL/BORROW/OVERDRAFTS/GRADUATE_OVERDRAFT

Typical 0% EAR variable, within these agreed limits:
up to £2,000 in first year after graduation
up to £1,000 in second year after graduation
up to £500 in third year after graduation

Does that mean every year after I graduate, I need to pay back £1000 after my first year, £500 after my 2nd year, and £500 after my 3rd year?

Otherwise I pay interest on anything over £1000 in my 2nd year, and interest on anything over £500 in my third year?

I could invest £2000 for 6months, £2500 for 24 months (by adding £500 savings to the ISA), £1500 for 12months (-£1000 to pay back NatWest), £1000 for 12months (-£500 to pay back NatWest) and then take all my profits??

This below is all based on an Egg ISA at 6.05%

£2000 - 6months = £61 interest made
£2500 - 24months = £302.50 interest made
£1500 - 12months = £90.75 interest made
£1000 - 12months = £60.50 interest made

£514.75 of interest for 4 years and 6 months of investment.

HarryPainful · 30 Jan 2008 at 00:46

Your profits for what exactly?

You dont need the money if you want to put it in an ISA so why "borrow" it...?

Leave it for someone that will need it.

benjo plz. · 30 Jan 2008 at 00:48

mp3kla said:
Does that mean every year after I graduate, I need to pay back £1000 after my first year, £500 after my 2nd year, and £500 after my 3rd year?

As far as I can see that's how much you can borrow each year. That's not a student overdraft, it's a graduate overdraft.

lord filbuster · 30 Jan 2008 at 00:50

have you thought about inflation? i think the interest on the isa is 4.98% gross, but inflation is about 2.1% to 2.5%, so the effective interest is only about 2.5%. So if you got those figures from the net AER of 5.1%, you will make a little under half of those figures,
£2000 for 6 months ~ £25
£2500 for 24 months ~ £120
£1500 for 12 months ~ £40
£1000 for 12 months ~ £25
It's not really worth it for four and half years of waiting.

Kristoph · 30 Jan 2008 at 00:50

Phnom_Penh said:
As far as I can see that's how much you can borrow each year. That's not a student overdraft, it's a graduate overdraft.

Sorry, forgot to say I'd be opening a student overdraft to start with, and carrying it on over to a graduate overdraft to get more interest from the ISA before it needs to be paid back.

[TW]Fox · 30 Jan 2008 at 00:51

HarryPainful said:
Your profits for what exactly?

You dont need the money if you want to put it in an ISA so why "borrow" it...?

Leave it for someone that will need it.

It's an overdraft from a large bank not a government grant or a charity handout.

elitetrick · 30 Jan 2008 at 00:51

HarryPainful said:
Your profits for what exactly?

You dont need the money if you want to put it in an ISA so why "borrow" it...?

Leave it for someone that will need it.

why leave it? banks make billions whats £2000 to them so someone can benefit.
dont worry, im sure natwest will have enough for someone that "needs" it.

Kristoph · 30 Jan 2008 at 00:53

HarryPainful said:
Your profits for what exactly?

You dont need the money if you want to put it in an ISA so why "borrow" it...?

Leave it for someone that will need it.

The people I see that 'need it', blow it on clothes and going out on the **** (my mates). I'd rather invest it than spend it on a load of crap I probably won't have anything to show for.