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Savings accounts – why it could pay to spread your savings around

We explain what the Financial Services Compensation Scheme (FSCS) is and why it matters for savers.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

If you've built up a large savings pot, there's more to think about than just getting a great rate. That's because your savings could be at risk if you don't manage them properly.

In the unlikely event your bank or building society gets into difficulties and can't pay your money back, you might be covered by the Financial Services Compensation Scheme (FSCS). But it doesn't pay an unlimited amount.

How does the FSCS work?

If your bank or building society is authorised by the Prudential Regulation Authority (PRA), you could get back up to £85,000 per banking licence (or £170,000 for joint accounts) in compensation.

‘Banking licence' is an important part of this. Some banks will share banking licences with others. So if you hold multiple accounts across banks which share a licence, the amount you could get back applies to the total amount you have across them, not to each individual account.

You can check if your bank shares its licence with another on the Bank of England website.

You can find out more about the FSCS on their website.

What does this mean in practice?

If you have a large savings pot, think about splitting it across different accounts under separate banking licences. Splitting your savings like this will maximise your protection, as only the first £85,000 is protected.

The compensation limit applies to all accounts you have with providers, not just savings accounts. So you should consider other accounts you hold with them too.

Boost your cash with Active Savings

If you're considering making more of your savings, take a look at Active Savings. It could help you get better returns on your cash and makes it easier to manage large savings pots.

Discover Active Savings

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.


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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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