Money, money, moneymaker!

If you have some of your student loan lying around don't be tempted to spend it - invest it! Even though we are currently being charged 4.8% interest it is possible to see a return without taking any risks.

Cash ISAs

A good way of getting a high interest rate is to put your money into a cash ISA.

This is the tax free way to save up to £3,600 per year. At the time of writing, Barclays' 6.5% interest rate appears to be the best.

Beware the phrase "guaranteed for a year" though, as it is not the rate which is guaranteed but an introductory bonus (usually 1%).

If you do opt for a cash ISA, check your interest rate after the first year because once you have lost your bonus it is possible to be making very little.

Savings accounts and bonds

For those of us who do not pay tax, a regular saver account may be a more effective way of saving.

Many students draw out 75% of their maximum interest free overdraft and invest it - only to give it back straight after graduation but keep the interest.

Victoria Bentley

They are easier to access and sometimes offer astronomical interest rates guaranteed for the first year.

These accounts can be quite rigid and sometimes require paying in a specific amount each month (usually between £25 and £500) but if you think your finances can be that reliable then choose a sensible, affordable amount and reap the benefits.

Student account freebies

Don't forget that most student current accounts offer great bonuses such as free CDs (HSBC), student railcards (Natwest) and interest free overdrafts in exchange for giving little or no interest.

Therefore, have your loans paid in to one of these accounts to get the freebies and draw it out immediately to pay into a higher interest account.

Many students also draw out 75% of their maximum interest free overdraft and invest it - only to give it back straight after graduation but keep the interest gained during their stint at uni.

More advice

If you want to investigate this further, a good place to start is Money Saving Expert which supplies excellent advice on the various accounts that might suit you and details of which institutions are offering the best rates.

In addition, Money Supermarket allows you to compare accounts.

The boring but important stuff

Of course your decision depends on a few things; how much you have to save, how much flexibility you want, and whether you're prepared to switch accounts to keep the best rate.

Before making any decisions read the small print - sometimes hidden stings mean that the highest interest rate isn't the best investment.