The recent economic downturn has had a major effect on the banks and the amounts that you can safely save with them. The government has nationalised two British banks so far, the Northern Rock and the Bradford & Bingley. The savings accounts from the Bradford & Bingley were passed to the Abbey Bank which is owed by the Spanish Bank Santander when the government took over the Bradford and Bingley. The government has also bailed out the biggest bank in the UK the Royal Bank of Scotland (RBS) Lloyds TSB and the Halifax by investing billions in each bank. Lloyds TSB looks set to merge with the Halifax Bank.
Spread your Saving Around - £50k here and £50K there!
The British government stood by its pledge and protected British investors recently. For the first-time the Financial Services Compensation Scheme (FSCS) has been tested when the British government stepped into protect British investors when I-Save the Icelandic Bank that went Bust. It is understandable that people are now very confused and concerned about the safety of their savings and where to invest. The shrewd investor with savings over £50,000 should look to spread their savings around the UK banks and building societies to protect themselves.
Find out what the deposit protection is for non-residence first before investing abroad. For example the Channel Islands of Jersey and Guernsey do not offer any deposit protection at the present time. You are covered by the Financial Services Compensation Scheme (FSCS) in any UK bank up to £50,000 per customer per bank. Should you have more than £50,000 it is a good idea to spread your money around the UK banks. Be careful not to open two accounts in the same bank or two banks that are part of the same group as you may not be covered.
Here are four rules to safe guarding your savings
Rule One Don’t invest your hard earned cash in foreign banks just because they have fantastic interest rates.
Rule Two Spread your savings around the various UK banks and building societies
Rule Three Make sure that you only have one savings account in your name in each bank. Your partner can also have a savings account in the same bank in their name and still be protected.
Rule Four Check that the bank is not part of a group of banks that will only cover you once under the Financial Services Compensation Scheme (FSCS) if you opened several saving accounts.
Rule Five Don’t invest in a foreign country until you have checked that they offer you a depositor’s protection scheme and make sure you understand the limitations of how you can invest there and still be protected with them. If they don’t offer protection then don’t invest there.
Before investing check with the banks or building societies first and ask the right questions. The first question being am I protected and up to how much will?
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