How safe are my savings?
Banking collapses have caused concern, but there are safeguards, says Paul Lewis
The recent collapse of two American banks and the rescue of the mighty Credit Suisse inevitably bring to mind the run on Northern Rock in 2007 and the collapse of Icesave in 2008. For the first time in 15 years people are asking: are my savings protected in a UK bank?
Well, the Government guarantees savings up to £85,000 in any bank that is regulated in the UK. It applies to the individual’s total in the bank and any subsidiaries or linked banks. It is also personal, so a joint account will be protected up to double that. Amounts above the limit may be at risk in the unlikely event that a UK bank fails. It also applies to money in a building society or credit union. It does not apply to money in an account with a firm that is not a bank – some card-only firms offer what they call “current accounts” but are only authorised as electronic money institutions.
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It’s safer to put your money in a regulated bank. Savingschampion.co.uk not only gives the best rates for savings, but also lists only regulated banks and explains which are linked. If one did go bust – and some credit unions have – you should be refunded within seven days.
Although the general limit is £85,000 per bank, a temporary balance up to £1 million is safe for six months if, for example, it is the proceeds of a house sale, compensation, an insurance pay out or divorce settlement.
Find out more by searching fscs.org.uk for “temporary high balances”. If you have more than £85,000 in savings then you can protect it by spreading your money across more than one bank to get £85,000 protection from each.
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Remember that the total will grow faster now that interest rates are higher, so don’t put more than around £80,000 in. If you do, then rolled-up interest might soon take you over the limit. If you have a great deal of money, National Savings and Investments has quite competitive accounts. You can deposit up to £2 million in some of them and it is all protected. Find out more at nsandi.com. For more information, search fscs.org.uk for “deposit protection”.