Finance Fridays – Safe places to save large amounts of cash

We were talking about crowdfunding Finance Fridays. This week we are looking at where you can save large sums of money knowing that it is relatively safe.

It's a nice problem – so much cash you don't know what to do with it. You might think that putting it in a bank or building society would be save enough but if the bank goes bust there are limits as what you could receive back. For deposits with bank, building societies and credit unions the maximum is £85,000 per firm per person or £170,000 for a joint account. So where can you put high sums of money knowing it is safe?

Spread the risk

With the Financial Services Compensation Scheme (FSCS) having limits of £85,000 per person per firm or £170,000 for a joint account then spreading your money across several different providers is a good idea to keep within the limits. Remember as well that what may seem like two separate companies can be owned by the same parent companies and therefore constitutes one firm. Therefore £50,000 saved with one company and £50,000 saved with another one of its companies could lead you to be £15,000 down if the company fails. For example Royal Bank of Scotland and NatWest hold the same registered reference number. The same also applies to Halifax, Bank of Scotland, Capital Bank and Birmingham Midshires.

Temporary High Balance

You may find that you only temporarily have a high balance. This could be because you have sold a business or property or perhaps you have come into an inheritance. While you wait to buy another property or decide what to do with the money it could all be stored in one account for convenience. If you can prove that the balance is temporary and has been caused by a certain event such a home move then the FSCS will protect that balance up to a maximum of £1million for up to six months. If you need to claim then the FSCS will require you to provide them with the necessary paperwork proving your claim.

Rate the risk

If you spot a good savings rate you may be tempted to put a all your savings into this one account and risk the £85,000 limit. There are a number of agencies who rate banks and building societies on their financial stability. Some of the bigger and well-known high street names have taken quite a pounding in the last ten years so do check them out.

Government backed

If you don't feel happy going down the bank or building society route then look at National Savings and Investments. They are 100% backed by HM Treasury so if you trust the Government...In all seriousness they have been doing this since 1861. Many of the accounts have lower investment limits than £85,000 but some like the Direct Saver go up to £2million.

If you want to join in with this week's Finance Fridays then add your link to the linky below. Any post concerning financial matters is allowed. Full details here. It doesn't have to be published today as you have until 23.55 on Tuesday 18th December 2018 to join in.

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