As savings rates soar, how to check up to £85,000 of your money is protected
Savings rates are on the up following consecutive interest rate rises by the Bank of England.
The top-paying easy-access account currently pays 4.35% - or you can get up to 6.15% if you lock your money away into a fixed account.
These figures are changing on a daily basis - so always double check the latest deals to make sure you’re getting the best for your money.
Of course, savings rates are still massively below the rate of inflation, which means your money is being eroded elsewhere - but this just means getting the most out of your cash is all the more important.
If you’re considering moving your money, you’ll want to make sure you’re protected if something should go wrong.
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This is where the Financial Services Compensation Scheme (FSCS) kicks in - providing an institution is registered.
Here, we explain how it works.
What is FSCS protection?
The FSCS protects up to £85,000 of your cash should a bank or another financial services firm go bust.
This limit applies per UK-regulated financial institution, not per account you may have with a firm.
So, if you've saved more than £85,000 with two banks that are owned by the same group with just one authorisation, you're only covered for £85,000 in total.
You're protected up to £170,000 if you have a joint account.
If you have a temporarily high balance - for example, because you have just sold a property or received inheritance money - you can be protected for up to £1million for up to six months.
The FSCS has a handy checker tool on its website so you can see if a financial institution is covered.
You should get the most accurate results if you enter the firm reference number (FRN) of the company you’re trying to find.
If your bank, building society or credit union has failed you don’t need to make a claim - the FSCS says it will automatically return your money.
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However, you would need to put in a claim if related to insurance, mortgages, pensions, payment protection insurance, investments and debt management.
According to Which? here is the maximum amount you can claim for:
- Banks and building societies: £85,000 per person, per financial institution
- Credit unions: £85,000 per person, per firm
- Debt management: £85,000 per person, per firm
- Home finance intermediation: £85,000 per person, per financial institution
- General insurance: 90-100% depending on the circumstances
- Life and pensions intermediation: £85,000 per person, per firm
- Long-term care insurance: 100% with no upper limit (if the firm failed after July 3, 2015)
- Investment provision: £85,000 per person, per firm
- Investment intermediation: £85,000 per person, per firm
- Payment protection insurance: 90% of total claim (if the firm failed after January 1, 2010)
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