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Saving Accounts

£85,000 is covered per person per institution.

UK regulated current accounts, savings accounts and ISAs are covered by the Financial Services Compensation Scheme for the first £85,000 per depositor per institution in case of failure.

Joint accounts:

Each depositor receives up to £85,000 in compensation, providing a total of £170,000.

Maximum protection:

For large sums, it is recommended that you open multiple savings accounts with different providers, and deposit no more than £85,000 in each one. Consider investing below the maximum limit to ensure that you can factor interest into your maximum compensation claim.

Overseas banks:

Some banks from the European Economic Area employ the ‘Passport’ scheme, which provides compensation through the institutions’ home governments. See saving with foreign banks.

‘Per Institution’ / Groupings:

Some merged banks / building societies now count as one institution, and accounts across them all still are only covered for up to £85,000. See independent and grouped banks below to see which banks hold seperate registrations and which combine to form single institutions.

Independent Banks

The banks listed in the table are amongst those which hold independent FSCS registrations (or state equivalent). You are covered for up to £85,000 with accounts in each bank. Even though some banks are part of a larger institution, they maintain separate registrations and are treated as a separate entity with regards to protection.

[*] Banks marked 'Passport' offer different levels of protection as they are European-owned. For more on this see the Non-UK Compensation Schemes section below.

Grouped Banks

The table below shows banks / building societies that hold joint memberships to the FSCS, and therefore constitute a single institution. There are numbered and coloured to aid accessibility. Only £85,000 per person is protected across all savings accounts within these groupings. The key is to spread your money across different institutions for maximum protection.

The definition of an institution is not straightforward. Though Lloyds and Bank of Scotland merged in 2009, the FSCS licences still treat each partner as separate institutions, covering up to £85,000 in each one. However, the core components of HBOS (Bank of Scotland, Halifax, Birmingham Midshires, Intelligent Finance, AA and Saga) all constitute one institution, so multiple savings accounts across all of these providers is only covered for up to £85,000 per person.

Savings with Foreign Banks

Many banks operating in the UK are based overseas. While most are regulated by the UK, some banks from the European Economic Area (e.g. Bank of Cyprus, ING Direct) operate compensation schemes through their home governments.

Use our tables to distinguish which banks have separate Financial Services Compensation Scheme (FSCS) registrations and which fall under the same institution.

Non-UK Savings Compensation Schemes

Below is a list of the level of compensation offered by non-UK banks. As in the UK, savers are protected per institution. For example, accounts held across Abbey, Alliance & Leicester, Asda, and Bradford & Bingley would only provide £85,000 compensation in total as they all fall under the Santander group.

Disclaimer: This information was updated in January 2012. At Which4U we do our best to keep up with market changes, though the frequent change of bank ownership may lead to some information becoming outdated. We do not take any responsibility for inaccurate information but we will endeavour to avoid it where possible.

Protect yourself from inflation by keeping your funds in a high interest savings account.

Believe it or not, you can still lose out when using a savings account. If the rate of inflation (the rise in the cost of living) is higher than your savings account rate then you are making a loss in real terms.

For example, if inflation measured 3%, a typical basket of goods valued at £1,000 would cost an extra £30 the following year. If the same £1,000 was placed in a savings account offering 2.5%, it would return £25 (£20 net), meaning that the purchasing power of that sum had fallen.

When inflation breached 5% in 2011, basic rate taxpaying savers needed to find accounts paying at least 6.5% interest to avoid losing out in real terms after tax. One guaranteed way of protecting against inflation is through an inflation-linked bond.

Make use of your annual tax free ISA allowance.

For basic rate taxpayers, taxable savings income begins at £2,560. Above this amount, 20% of any interest received on savings is taxed. Higher rate taxpayers earning over £35,000 will be taxed 40% on their savings, while those earning over £150,000 will be taxed at 50%. The only tax relief available on savings is through a growth / investment or cash ISA.

The ISA limit is currently £10,680 (2011-2012), of which half (£5,340) can be invested into a cash ISA. The full quota can be invested into an investment ISA if the cash ISA allowance is not taken, or the remainder can go into a growth ISA after the cash ISA has been fulfilled.

Only one ISA can be opened per financial year and funds can only be added to one ISA during each financial year. However, an ISA can combine both types of investment: cash and stocks.

Any unused tax-free ISA allowance does not carry over to the following year. ISAs enable savings income on dividends, bonuses and interest without tax. An allowance not fully used is an opportunity lost. For more information on ISAs please see our ISA section.

Deposit chunks of cash into fixed-rate bonds.

Savers can find higher interest rates by locking money away in fixed-rate bonds for a set period. Typically, the longer the bond, the higher the interest rate on offer, though this is not always the case.

If you have a surplus in your current account that you could manage without for a year or more, a fixed-rate bond is an ideal savings account. By sacrificing access to your savings for a period of time it is possible to earn considerably rates higher than the best instant access savings accounts.

Investment Bonds.

Investment bonds are an exciting savings option, allowing saver the opportunity to earn much higher returns on their investment. There can be greater risks involved with this kind of account, but this is balanced by the prospect of greater returns. This can be a very attractive offer when banks are offering low interest rates on regular savings accounts.

The risk involved can be on the capital you make, or simply on the potential returns on your investment. By choosing your account carefully you can protect your main investment through Capital Protection, allowing you the chance of great returns, while knowing that your money is safe. [Our tables clearly note where capital is at risk]

This is also a great way to invest into your ISA allowance. Up to £10,680 per year can be invested into investment bonds, allowing you to gain the full amount of your returns without having to pay any tax. This allows fantastic earnings, as there is no limit on how much you can earn per year.

For a full list of our investment products, check out our investment bonds page.

Treat instant access savings accounts as current accounts.

If you can keep as much of your day-to-day money in an instant access savings account rather than a current account, you can capitalise on the better interest rate.

The top instant access savings account currently pays c. 3.1% AER, compared to a standard current account, which only pays around 0.1% AER interest.

This requires some careful money-management to ensure that there are enough funds in your current account to cover direct debits and spending. Transferring funds between your current account and your instant access savings account can be done very easily with online banking. A new faster version of the APACS system has made internet transfers much quicker, helping you to manage your cash requirements.

Have your salary paid into an high interest instant access savings account.

If this is possible, it is a great way of earning higher interest on your salary as soon as it arrives in your account. You can then transfer funds to your current account as and when required.

Set up Internet Banking.

All the instant access savings accounts listed on Which4U come with online banking facilities. Once you have applied for one of these accounts you will be able to set this up, giving you 24/7 access to your savings account. This will enable you to view your statements, transfer your funds, and manage your accounts.

Set yourself savings goals or 'targets'.

A goal or target, such as a holiday, helps for saving more effectively. Saving is psychologically driven, and a goal helps you to think about efficiencies or opportunities to achieve your savings goal quicker. Some savings accounts allow you to set up 'virtual pots', to which purposes such as ‘car’ or ‘holiday’ can be assigned.

If you are self-employed, why not move your business funds to a high interest account?

If you are self-employed, you can apply the same personal savings mentality to your business. Many business bank accounts charge for depositing funds, paying cheques and transferring money, and offer poor levels of interest on positive balances.

Which4U lists business bank accounts that offer free banking for life. Better finances for your business means greater rewards for you!

Protect yourself.

Protect yourself from bank failures by depositing no more than £85,000 in any one financial institution.