are your savings protected

Are your savings safe?

Full guide to protecting your cash

The panic over the collapse of Northern Rock, Bradford & Bingley, Icelandic banks and others may seem a distant memory, yet with the Covid-19 pandemic facing the world and indeed our finances, every sensible saver needs to remember the lessons and ask: "Are my savings safe?"
 

This is an account-by-account savings safety check-up, which shows what protection you have if the worst happens.

Brexit update: EU banks that operate in the UK can continue to do so for another three years 

Firms authorised in the European Economic Area (the EU plus Iceland, Liechtenstein and Norway) can offer most of their services in the UK under a system known as 'passporting' – where a firm in one EU member state can provide services to customers in other member states without having to get direct authorisation in those other states.

The Financial Conduct Authority has confirmed the Government's 'temporary permissions regime' which allows firms already in the UK to continue to operate for up to three years following Brexit, will continue following the announcement of the trade deal. 

In the meantime, many EU-regulated banks are applying for UK licences, which mean that if you bank with them, your money will be protected by the Financial Services Compensation Scheme – up to the value of £85,000 – in the unlikely event that the bank went bust. This is the same protection you get with a UK-based bank. 

We're asking if your cash is protected while an EU-regulated bank awaits its UK licence and we will update this guide when we know more.

Six facts everyone should know

Before we get to the nitty-gritty, if you only remember six things, make it these:

  1. You get £85,000 protection per UK-regulated financial institution

    All UK-regulated current or savings accounts and cash ISAs in banks, building societies and credit unions are covered by the Financial Services Compensation Scheme (FSCS).

    This limit used to be £75,000 but from 30 January 2017 it increased to £85,000 after the pound's post-Brexit fall prompted a review by the Bank of England. But this doesn't mean you'll get £85,000 for every account – the £85,000 is per financial institution. So if the bank fails, you'd get back up to £85,000 per person, per financial institution. The majority should get it within seven working days.

  2. You've a temporary £1 million protection after a 'life event'

    Rules introduced in July 2015 mean that savings of up to £1m may be protected for a six-month period if your savings provider goes bust.

    The increase is to cover life events such as selling your home (though not a buy-to-let or second home), inheritances, redundancy, and insurance or compensation payouts that could lead to you having a temporarily-high savings balance.

    The extra cover will apply from the date on which the money is transferred into the account, or the date on which the depositor becomes entitled to the amount, whichever is later. You'll need to prove where the funds came from in the event of a claim – and be prepared to wait up to three months for any cash over £85,000.

    You can read more about what qualifies as a 'life event' on the FSCS website.

    This change is a boon, because it allows you time to sort a plan for the cash. But, not only that, it also allows you to maximise savings by putting more cash into higher interest paying accounts than you'd otherwise be able to.

    Update Fri 7 Aug: In light of the coronavirus, and the difficulties people may have in spending or moving these temporary high balances, the FSCS has extended this protection. Now any high balances resulting from a life event deposited between 6 August 2020 and 31 January 2021 have £1 million protection for a period of 12 months rather than six.

    Any qualifying temporary high balances deposited on or after 1 February 2021 will have the usual six months' protection. 

  3. Not all UK savings are UK-regulated

    Most banks, including foreign-owned ones such as Spain's Santander, are UK-regulated. Yet a few EU-owned banks opt for a 'passport scheme' where you rely on protection primarily from their HOME government.

    This includes Fidor, Ikano Bank and more. See the foreign banks list for full details.

  4. The amount's double in joint accounts

    Cash in joint accounts counts as half each, so together you've £170,000 protection.

    If you've an individual account with the same bank, half the joint savings count for your total exposure, and any amount over £85,000 isn't protected. For more info, see the joint accounts protection below.

  5. An institution is NOT the same as a bank

    The protection's per institution, not account. So four accounts with one bank still only get £85,000. The definition of 'institution' depends on a bank's licence and giant banking conglomerates make it complex.

    For example, sister banks Halifax and Bank of Scotland's accounts are only covered up to £85,000 combined. RBS and NatWest are also sisters, but their limits are SEPARATE. See the What Counts As A Bank? tool below.

  6. Spread savings to keep 'em safe

    For perfect safety, save no more than £83,000 per institution (the extra £2,000 gives room for interest). Spreading can be worth it even if you've under £85,000; if your bank went bust, the money could be inaccessible for a spell. Using two accounts mitigates the risk.

    For a full list of top accounts, see our Best Buy Savings guide. Or for how to save safely, including dealing with very big amounts, see 100% Safety below.

What does the FSCS cover?

The Financial Services Compensation Scheme (FSCS) only applies to organisations regulated by the Financial Conduct Authority (FCA). This was the big problem with failed Christmas savings scheme Farepak, as it had no protection whatsoever. When it went bust, the money was gone.

The main categories of protected savings are:

  • Bank and building society accounts

    All UK credit unions, bank or building society savings accountscurrent accounts and small business accounts are covered to some degree by the FSCS.

    Certain types of guaranteed equity bonds, 'deposit accounts' where the interest paid depends on the stock market's performance, may also count for 'savings' protection.

Retirement savings money in jar
  • Any cash saved within a SIPP pension

    If you have a self invested personal pension and are keeping some of the money in cash savings there (as opposed to investment funds), then you get the full FSCS savings protection on that, separate to any investment protection (read full details).

    SIPP providers will tell you which banks are holding your cash, so you can check if it's linked to any others you have savings with (see linked banks table below).
  • Any cash ISA (including Help to Buy ISAs)

    These are simply tax-free savings accounts, so they have the same FSCS protection as any other savings accounts. This includes the cash ISA's forerunner, the Tessa-Only ISA (Toisa). Plus the ISA money will retain its tax-free status if the institution it's held in goes bust.

  • This guide's primarily about 'saving'. If you put money in stocks and shares, funds, or a pension, then that's a 'risk-based investment', NOT savings. The FSCS protection can be different...

    Investor protection is about providers going bust, not you losing money

    The FSCS investment protection applies if you lose money due to the product provider of the investment going bust – for example, if you've got a stocks & shares ISA with a bank, and the bank goes bust – and not if the underlying investment goes bust.

    In other words, if you've got shares in a company and it goes kaput, or you've bought a fund and it performs poorly, then generally there's no safety net to fall back on – that's the nature of investing.

    Yet in many cases if you're buying shares or funds through a company – eg, some stockbrokers just sell you shares – the fact the stockbroker went bust wouldn't actually matter. You'd still own the shares, so there'd be no compensation.

    Investment protection varies with each product's structure. Always check. Many limits changed on 1 January 2010, and the investment fund and pensions limits changed again on 1 April 2019, so if the company went bust before then different limits may apply.

    • Investment funds

      If you've put cash into an investment fund (eg, through a discount broker), you'll get 100% of the first £85,000 back.

    • Pensions

      The protection you get for your pension depends on how your money is held. It can get quite complicated, but in general:

      - For annuities, your money is 100% protected.
      - For investments, 100% of the first £85,000 is covered.
      - For cash, 100% of the first £85,000 is covered.

      If you've got a self-invested person pension (SIPP), the FSCS protection will depend on how you decide to invest your money. 

      If you choose to invest in stock market funds or other investment vehicles, 100% of the first £85,000 is covered.

    • Life insurance

      Money paid into life assurance products usually falls under the category of 'long-term insurance', meaning 100% of what's in them is protected.

     

  • If you take out home, car, travel, life or even PPI loan insurance, and the provider goes into default, then the Financial Services Compensation Scheme kicks in.

    There are two main ways in which it protects you.

    • If you need to claim from a bust insurer

      The FSCS's main objective is to 'maintain continuity'. This means if your insurer goes bust, it will try to find another provider to take over your policy, or issue a substitute policy. However, if you have any ongoing claims, or need to make a claim before a new insurer is found, the FSCS should ensure these are covered.

    • If it goes bust and you paid upfront

      If you've paid for cover for a year, but the company goes bust after a month or two, then you would lose out.

      To protect against that, if the FSCS can't transfer your policy to another provider, you'll be given a period of time to take out alternative insurance, and any money you've already paid will be refunded as compensation via the FSCS. To help explain, here's a quick example...

    You paid for a year-long policy in January and the insurer went bust in September. If the FSCS can't get the policy transferred elsewhere, then you will receive four months' compensation of the original cost.

    The limits of the compensation depend on whether the policy is compulsory or not.

    Compensation for policies like third party car insurance, which you are required by law to have, are unlimited, so you get 100% of the premium back. Non-compulsory policies (eg, home, travel, life and PPI) have cover for 90% of the money paid.

  • If you've a savings scheme for a hamper or Christmas club, got money in PayPal, funds stored with a cashback site or points in a loyalty card scheme, then you may be protected by an industry scheme, but you won't have FSCS protection.

    Also, if you're ordering or buying goods where you don't receive them immediately, such as a kitchen, flights or a computer, then those purchases aren't covered either. There is a way to protect yourself for free, though – see the Is My Spending Safe? guide.

How does the protection work?

All UK-regulated deposits – including money saved and accumulated interest – in bank or building society savings products, are covered by the FSCS.

This is an independent fund set up by government and regulated by the FCA, which promises that, in the event of a bank collapsing, you get some of your money back, though it's likely you'll lose access to the cash while compensation is being dished out.

This applies to everyone, no matter their age (including children), or where they live. Provided the bank is registered in the UK, crucially:

100% of the first £85,000 you have saved, per financial institution, is protected.

The biggest issues here are what counts as an institution? and what's a UK-regulated institution? (see later for both). But they're not the only ones... (click to open/close)

  • The amount has been changed five times. First on the back of Northern Rock, then Bradford & Bingley, then to bring the UK in line with the rest of Europe, then to account for post-Brexit vote currency fluctuations.

    If you're one of the very few who still have outstanding issues, the amount you get will depend on the time of the 'compensation trigger'.

    Defaults between 1 Jan 2016 and 29 Jan 2017: If your bank went bust between these dates, you'd get back the first £75,000 per person, per institution.

    Defaults between 31 Dec 2010 and 1 Jan 2016: If your bank went bust between these dates, you'd get back the first £85,000 per person, per institution.

    Defaults between 7 Oct 2008 and 30 Dec 2010: If your bank went bust between these dates, you'd get back the first £50,000 per person, per institution.

    Defaults between 1 Oct 2007 and 6 Oct 2008: You'd get 100% of the first £35,000 back.

    Defaults before 1 Oct 2007: You'd get 100% of the first £2,000 of your cash back and 90% of the next £33,000 on top; so you'd get £31,700 of the first £35,000 back.

  • Money saved in an account registered in two names receives twice the protection; therefore that's the first £170,000. Don't get too excited though, this isn't an extra allowance. It's simply the same protection as if each account holder had a separate account.

    In fact, the best way to think about this is that half the money in the account belongs to each person. An example should help...

    Sensible Steve has £170,000 in a joint account in RiskyBank with his girlfriend Saver Sally, plus £20,000 in a separate account of his own with the same bank.

    If RiskyBank went bankrupt, then if you consider half the joint account money (£85,000) is Steve's, then added to his separate savings that's £105,000. Therefore, he would lose £20,000.

    That means it's possible you could lose out by having a joint account.

    Imagine Reckless Rick and his partner Rachel have a RiskyBank joint account with £160,000 in, plus Rachel has £10,000 in her own account with the same bank.

    Here, if the bank went bust, the full joint account balance would be covered; split at £80,000 each. So Rachel only has £5,000 of protection left to cover her own account, leaving the remaining £5,000 at risk.

    So even though between them, they've only £170,000 in savings, it's not all covered by the compensation scheme. They would've been better off simply having all the money in the joint account, or having £85,000 each in separate accounts.

  • The protection applies both to the amount you saved and any interest that would've accrued on the day it went bust.

    That means if the interest pushes you over the £85,000 limit, then any amount above it isn't covered. So you may want to put a little under £85,000 in.

  • If you have debts, such as a mortgage, loan or credit card with a bank that you also have savings with, these two things will be treated separately. So if the bank went bust, you'd receive compensation for savings from the FSCS, and still owe the bank the full amount of your debts.

    This system has been in place since January 2011; previously, your savings were automatically subtracted from debts. Now you aren't forced to pay off debts that you wouldn't have had to under normal circumstances.

    If you have savings in one institution which come to more than the FSCS limit of £85,000, then anything over that is likely to be automatically deducted from your debts when administrators come into the bank – another good reason to adhere to the limits.

    However, it's worth noting that if you have substantial savings, paying off most loans and credit cards is a good idea (see the Should I Pay Off My Debts? guide), though for mortgage debt it's not always the best choice (see Should I Pay off My Mortgage? guide).

  • If, in the unlikely event of your bank collapsing, you want to get money out straight away, the chances have now improved. Since 2011, the FSCS has had a target of having paid the majority of claimants within seven working days, and everyone by day 20. The compensation will be paid out automatically, so you won't need to make a claim.

    This is, as yet, untested – although the only big payout in recent years, for savers in Icesave, went pretty smoothly. It's a strange scenario; no-one really wants this procedure to be tested, but until it is, we won't know how well the new system works.

  • Any savings held offshore, ie, particular types of savings accounts, not any money held in a non-UK bank, are usually regulated by the local financial authority, rather than the FCA.

    The FSCS protection only applies to companies regulated with the FCA, so if your savings are held offshore check with your lender where it is regulated. For example, the FSCS does not cover savings outside the European Economic Area (the EU plus Iceland, Norway and Liechtenstein), nor does it cover the Channel Islands or Isle of Man.

What counts as a 'financial institution'?

There's no easy definition. Over the years, many banks have merged or been taken over, blurring the lines as to what counts. Technically, it's all about the company's registration at the regulator, the FCA.

This can leave some strange results – for example:

  • Put money in the Halifax, Bank of Scotland and BM Savings, all part of the same group, and the protection limit is combined. You'd only get £85,000 altogether.

  • Put money in the Royal Bank of Scotland, NatWest and Ulster, which are all part of the giant RBS conglomerate, and you get separate £85,000 protection for each of the three banks.

Take a look out our tool below to see which banks share their savings protection. 

What about bank takeovers?

If your bank's been taken over, your exact protection can depend on the date you opened a savings account. Here's a merger-by-merger guide:

  • After Halifax Bank of Scotland (HBOS) got into trouble in autumn 2008, Lloyds TSB took it over, but remained as two separate institutions, so if you've savings in both, they're covered up to £85,000 each.

    In November 2013 some branches of Lloyds TSB in England and Wales, all branches in Scotland, and all Cheltenham & Gloucester branches, were formed into a new TSB business. The rest remained as Lloyds.

    Bear in mind that within the wider group, the constituent parts of HBOS (Halifax, BM Savings, Intelligent Finance, the AA and more) only count as one institution, as do Lloyds and Cheltenham & Gloucester, so multiple accounts within these get just the £85,000 cover.

    TSB has its own £85,000 FSCS safe savings guarantee, held under the TSB banking licence.

  • The giant Spanish bank Santander also owns Alliance & Leicester, internet-based banking brand Cahoot and the savings business of Bradford & Bingley.

    Since May 2010 these banks all share one £85,000 protection. So if you have more than £85,000 saved between Santander, A&L, B&B (both of which have been rebranded as Santander) or Cahoot, then the excess isn't covered.

  • In September 2019 Clydesdale and Yorkshire Banks and Virgin Money merged to become one bank. Previously both had a banking licence, meaning you'd be protected up to £85,000 with each bank. Now Clydesdale Bank, Yorkshire Bank and Virgin Money are covered under one banking licence, so you'll only be protected for up to £85,000 across the group. 

     

    Before this, Virgin Money purchased previously-state-backed Northern Rock and rebranded all accounts to Virgin Money. All accounts then had £85,000 protection rather than the 100% safety Northern Rock had as a state owned bank up until May 2010.

  • In October 2012 it was announced Barclays was purchasing ING Direct, the UK savings arm of the Dutch bank ING.

    They were protected very differently. As part of the UK FSCS, Barclays customers got the full protection of £85,000 per person. As part of the Dutch compensation scheme, ING Direct savers would have had to claim from the Dutch Government, up to their €100,000 compensation limit, if it went bust.

    Since 18 March 2013, everyone holding an ING Direct savings account is now protected under the Barclays UK FSCS compensation limit. The £85,000 protection is now shared across ING Direct, Barclays and Woolwich.

  • In April 2013 it was announced that all UK accounts at the Cypriot-owned Marfin Laiki Bank were to be sold to Cynergy Bank (formerly Bank of Cyprus UK). These accounts have since all been transferred to the Cynergy Bank brand.

  • In October 2015, the AA launched a partnership with Bank of Ireland UK. All AA savings accounts opened after 6 October 2015 share their £85,000 FSCS protection with Bank of Ireland and Post Office Money, so if you've savings with either of these, check the total saving isn't more than £85,000.

    Any AA account opened before 6 October 2015 will continue to be protected by Birmingham Midshires, and so will share the £85,000 savings safety protection with Bank of Scotland, BM Savings, Halifax, Intelligent Finance, Saga and Aviva.

What if my building society has merged with another?

In the aftermath of the financial crisis, a spate of building society takeovers peppered daily news broadcasts. Initially, the Government acted to protect savers who had money stashed in two different building societies that merged, but that ended in December 2010.

So, if you have money in more than one of the institutions contained within the following groups, you now only have £85,000 protection across that group.

  • Co-operative Bank and Britannia
  • Nottingham and Shepshed building societies, trading as Nottingham BS
  • Yorkshire, Chelsea, Barnsley, Norwich & Peterborough building societies, plus Egg.

Nationwide used to share its protection with Cheshire, Derbyshire and Dunfermline Building Societies, but all products held with the three smaller building societies are now Nationwide branded. The same is true of Coventry BS and Stroud & Swindon BS – any old S&S accounts are now Coventry branded.

What about saving with foreign banks?

There are lots of overseas-owned banks operating in Britain, including Santander, ICICI and Yorkshire Bank. Providing they're not 'offshore' accounts (which are very different), it's usually irrelevant who their parent company is.

They're UK-regulated banks, so you get the same £85,000 per person protection. Yet there's a subtle extra dimension...

If a bank gets into trouble, it's to be hoped there'd be a bailout which didn't affect savers, so all your money's protected (though that of course isn't guaranteed). This didn't just happen with UK-owned Northern Rock and Bradford & Bingley, but also with Iceland-owned (but UK-regulated) Kaupthing Edge.

Where possible, always keep your cash within the £85,000 limit, as it's an aim but not a promise to bail out banks that fail. However, this is particularly true with non-European banks, as this has not been tested yet (and hopefully won't be!).

Some European banks may NOT be UK protected...

It is possible for a bank to be operating in the UK with the FCA's full approval, yet the protection you get is not provided by the UK Financial Services Compensation Scheme. It's not banks owned in far-flung countries you need to watch, but European-owned banks.

That's because banks from the European Economic Area are allowed to opt for a slightly different protection, called the 'passport scheme', which means if they went bust, you'd have to claim money back from the bank's home country's compensation scheme.

Banks from outside Europe can't do this, and therefore if they operate here have full UK compensation.

Save with one of these, and all your savings safety depends on the stability and solvency of a foreign government or their financial regulator.

Of course, some countries may be more financially stable than the UK, but remember you're then reliant on a government you don't have a vote for to actually choose to pay out.

On a positive note, since 2010 all European countries have been required to have a compensation limit of €100,000 (the UK uses £85,000 as we aren't in the euro).

If you have savings in a European bank that's currently fully covered by the FSCS, and it then decided to opt for the 'passport scheme', it would have to inform you of the change.

One final note. It's possible for a European bank to operate in the UK using only its home compensation scheme, even if that's lower than the UK scheme, so you'd be eligible only for that amount. In this situation, the foreign bank will not be FCA-regulated but it may still be regulated by its government's own protection scheme.

Accounts from these banks occasionally offer higher rates than UK-protected ones – if this is the case, we'll mention them in our Top Savings guide.

With non-UK regulated examples like these, bear in mind it may be harder to get your money back if anything did happen to the bank.

  • There's a 'temporary permissions regime' in place which allows firms already in the UK to continue to operate for three years - this has not been affected now the trade deal between the UK and EU has been agreed. Some EU-regulated banks have applied for UK licences, for example, RCI Bank got a full UK banking licence, which means it's now covered by the UK Financial Services Compensation Scheme.

Which banks does this apply to?

Here's a list of the big non-UK savings banks and smaller top payers that have been in our best buys over the past few years.

Overseas banks with savings accounts in the UK

100% protected by FSCS (no passport exemption) Not covered by UK FSCS (passport-exempted)
Allied Irish Bank (UK) (Allied Irish) Agri Bank
Cynergy Bank
Ikano Bank
Bank of Ireland UK Fidor Bank
Citibank (Citigroup)  
Clydesdale Bank (National Australia)  
Firstsave (First Bank Nigeria)  
Al Rayan Bank  
ICICI  
State Bank of India UK
 
Yorkshire Bank (National Australia)  
RCI Bank  

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Will my bank or building society go bust?

Take a trip back a few years and this question would've been laughed out of school. Yet 2007 and 2008 saw such massive tremors – with Northern Rock, Bradford & Bingley, Icelandic banks and Wall Street giants Bear Stearns, Merrill Lynch and Goldman Sachs experiencing various degrees of catastrophe – that everyone started asking: "Am I safe?"

Bailouts more common than payout

It's right to focus on the Financial Services Compensation Scheme, but actually it's the last line of defence.

With most of the banks that collapsed during the financial crisis, politicians stepped in with alternative remedies. Both Northern Rock and parts of Bradford & Bingley were nationalised, and Kaupthing Edge's savings business was transferred to ING Direct.

That could be seen as a huge statement of intent that politicians will take extreme action to avoid a bank going to the wall. Of course, since then we've had a change of government, so we don't know how it'd work now – but it's likely similar things would be tried.

The only UK savings bank that went into liquidation was Icesave. Unlike fellow Icelandic bank Kaupthing, its structure meant it was technically an Icelandic bank, not a UK one. Even then, the Government covered every penny, not just the £35,000 compensation limit (as it was back then).

Even with this though, while the Government's intention seems to be for no one to lose any cash, regardless of the amount they save, that ISN'T guaranteed.

So it's important to think this way...

The UK Government's intention is to protect all savers, but only the first £85,000 is guaranteed. So that needs to be the focus.

  • Picking out a collapsing bank is an incredibly difficult thing to do. Even the niche City specialists get it wrong, and it's certainly far from our speciality. That's why we focus on protection, which is far more important as you can be sure about it.

    Worse still, predicting bank collapse could hasten or even cause a collapse by creating a bank run where it wouldn't have happened otherwise (many say this happened to Northern Rock).

    If you want to check the reported financial strength of a big public company, check its credit rating – AAA being the best, then ratings are graded downwards.

    Yet the sheer speed of change when there's financial contagion means even this isn't a particularly reliable indicator. To check your bank's strength, use Standard & Poor's, though it's not overly simple to use. For a quick search, try Fitch Ratings instead.

    It's also worth searching Google News for any stories about the company.

  • The FSCS doesn't keep a pot of cash sitting ready and waiting. Instead, it has the power to operate a 'compulsory levy' on banks, insurers and others signed up to the scheme, as and when it needs the money.

    The advantage of this is it can pull cash from more than just the affected sector (if an insurer went down, while other insurers must contribute first, above a set level banks would be asked to chip in too) so funds should be available.

    In theory, this means should the worst happen and a bank goes out of business, the FSCS has legal power to call in funds from major financial institutions to cover the compensation needed.

  • The FSCS has a cap on how much cash it can levy per year from financial institutions. From 1 April 2008, the overall capacity was set at just over £4 billion. Yet in the FCA's review document (page 77), it admits:

    "5.51 The Government will therefore include provision in the forthcoming legislation to allow the National Loans Fund to lend to the FSCS. These loans will have to be repaid, with interest charged at appropriate market rates, out of future levies on the industry, as well as from the share of recoveries from the estate of the failed bank that accrue to the FSCS."

    In a nutshell, this means if the fund didn't have enough cash, the Government will lend it the money, and it will then try to get it back from the insolvent bank's assets and by putting a levy on the banks for years to pay it back. Indeed, the FSCS money that was used to help push through the takeovers of Bradford & Bingley and Kaupthing was borrowed from the Government and will be paid back in future years.

    This wasn't always the case. Until 2008, it seemed there was no back-up plan. The first we heard of the Government's willingness to back the scheme up was actually due to a TV programme... Find out more

How to save in 100% safety

There are a number of techniques for this, including some accounts that are 100% safe above and beyond the normal limits (see 100% safe savings below), but that can mean getting lower interest rates. So for most people, the golden rule is...

Spread your savings

Putting money into more than one account doesn't just mean more of your money is protected. It also follows the sensible old adage "don't have all your eggs in one basket", therefore mitigating risk.

The techniques you adopt depend on the amount of cash you want to save.

  • Under £85,000

    If you've less than £85,000, there's no problem in terms of protection. Yet if a bank went bust and you were to have to claim compensation this could take time (though the procedures have been sped up), and meanwhile you wouldn't have access to any cash. So it's still worth considering splitting money across more than one financial institution.

  • Over £85,000

    For those with bigger savings, in the unlikely event a bank or building society went bust, the golden rule is not to put more than £85,000 in any one financial institution. Spread your savings around a number of accounts.

    This a perfectly sensible strategy; just use the tool above to check they genuinely are separate institutions.

  • Very large amounts

    For those with very large amounts of savings (for example, from a house sale) there's now a temporary six-month £1 million limit. This only applies after a 'life event' has caused you to have temporarily high cash balances. Life events can be house sales, inheritances, compensation paid, insurance policies & several other events.

    If you do have a claim while you're protected by this temporary limit, you'll need to prove where the high balance came from for the claim to be approved. You would then have to wait up to three months for the FSCS protection to pay out.

    If you'll have permanently high cash balances after the life event, you may need to forget the £85,000 limit and just spread your cash into three or four different accounts. While you're not fully protected, the act of spreading is at least mitigating a chunk of the risk.

There are usually nine or 10 very competitive accounts, meaning you can save well over £85,000 in perfect safety. To help, at several top accounts are included in the Best Buy Savings Accounts guide, so pick the highest payer then work your way down.

Plus any new best buys go in the weekly email.

100% safe ways to save

It's also possible to get 100% safety via using a variety of different techniques.

  • National Savings and Investments (NS&I)

    All money in the state-owned bank NS&I is fully backed by the Government, meaning money put in there is as near to 100% safe as you can get.

    Technically it doesn't have any more protection than any other institution, as ultimately the protection most banks have is that if they go bust, the Government will bail them out. Here it's Government-owned, so as it'd take the Government going bust for it to be in trouble it's as safe as it gets (if the UK went bust we'd all have bigger problems!)

    Its most popular product is Premium Bonds, though the returns on them aren't great (see the Premium Bond Probability Calculator) and you can only put £50,000 in there anyway.

    It does have other products, including normal savings accounts, and cash ISAs, and at various times the rates are reasonable. Good ones will always be in Top Savings guide.

  • Repay your debts

    Most credit cards and loans cost a lot more in interest than you earn on your savings. So repay the debt with the savings and you're quids in. Once debts are gone, they're gone, so it's safe. See the Repay Debts with Savings guide.

  • Overpay on your mortgage

    Many mortgages let you pay off a bit a month, or even in big chunks. Paying off a mortgage, say at 6%, is a bit like earning that amount on savings after tax as DECREASING your costs is similar to EARNING cash.

    Plus, in a tough mortgage market, the less you borrow compared to the house's value, the better deals are available to you. So repaying now may lead to a better deal at remortgage time. 

  • Your money's not safer under your mattress

    If you don't trust banks, you may want to stash cash under the mattress. But most home insurance policies only cover up to £750 cash if it's nicked. Plus – as a fireman told us – "Money under the mattress make a nice accelerant in house fires for us to deal with."

    So, all in all, it's probably better to find a decent savings account for your cash.

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