Top Tips On How To Keep Your Money Safe

These are worrying times for savers. Not only have interest rates fallen to record lows, slashing the returns people can earn on their money, but there have also been a number of high profile banking collapses.

Unsurprisingly, many consumers have been left wondering if they wouldn't be better off stuffing their savings under their mattress. But, by following a few simple rules, people can easily keep their money safe, while still earning a decent return on their savings at the same time. Just follow these simple money top tips&

The savings safety net

The good news for savers is that the UK has a savings safety net, known as the Financial Services Compensation Scheme (FSCS). The scheme will pay compensation of up to ?50,000 to single account holders who have lost money as a result of a bank or building society going under, and up to ?100,000 for joint accounts. The scheme currently pays out within three months, and there is talk of speeding this up to as quickly as seven days.

Banks versus brands

However, things can get a bit complicated. The FSCS will only guarantee up to ?50,000 or ?100,000 per banking licence and not per brand. As a result, those who have more than this amount in savings with different brands - which are part of the same banking group - could still lose out if their bank goes bust. It's therefore important to ensure that your money is spread around different banking groups and not just different brands.

Things have been made particularly complex by the recent wave of consolidation in the banking industry. For example, Lloyds TSB and HBOS are now part of the same banking group, but continue to trade under different banking licences, meaning they have separate compensation limits under the FSCS. But Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance all trade under the same licence.
Similarly, Abbey, Bradford & Bingley and cahoot are under the same licence, while Alliance & Leicester is under a different one, although they're all owned by Spanish banking giant Santander.

Government Guarantees

For people who are worried about the safety of their cash, there are a number of institutions that have government guarantees.

National Savings and Investments is backed by the UK Treasury, which sees the group boasting that it's 100% secure, while Northern Rock has also been nationalised - making it similarly secure.
All money invested in Irish banks is guaranteed by the Irish government, including money that is held in the UK arms of Irish institutions. As a result, the Irish government guarantees any money held in Post Office savings accounts, as the accounts are provided through a joint venture with the Bank of Ireland.

5 top tips to keep your money safe

1. Spread your cash around. Even if you don't have more than ?50,000 worth of savings, it's still worth holding it with different institutions, just in case the worst happens, and you're left without your money while you wait for the FSCS to pay out.

2. Check your savings provider is covered by the FSCS or a similar foreign scheme. All savings providers, authorised by the Financial Services Authority in the UK, are covered by the FSCS. Some foreign providers may also be covered by the scheme, while others will just be covered by their home country's scheme, which in some cases could pay out less than the FSCS.

3. Make sure you know who would refund your money if things went wrong and how much you'd get back. The easiest way of establishing this is to simply ask your bank.

4. Make the most of the security offered by government-backed institutions.

5. Take advantage of the savings guarantees being offered by the Irish government.

While it's important to keep your money safe, savers should still try to get the best returns on their cash. Compare savings online using a comparison service to make sure your money is working hard for you.