Most people who have savings have at one time or another thought about the horror of losing them all with the financial collapse of their bank or building society, and no doubt this thought has crossed your mind as well. With the current economic climate and the public struggles that some building societies have been having recently the question has never been more poignant…so how safe are your savings?

The FSCS
The Financial Services Compensation Scheme (FSCS) is the protective body of the UKs banks and building societies. This means that should your bank or building society face serious financial difficulties that result in its collapse you would automatically be compensated up to a value of £50,000. So for any savings you have up to £50,000 you would receive 100% compensation. If you’re lucky enough to have more than £50,000 in savings though then you’ll probably be eligible for additional funds from the assets of the bank when they have completed the insolvency process. This can take many years though and you aren’t guaranteed to get all of your money back…if any at all.

The FSCS also deals with claims against Credit Unions when they declare insolvency. In this case though, savings up to the value of £35,000 are automatically compensated and anything further depends on the outcome of the liquidator’s assessment.

Either way though, you are guaranteed some, if not all, of your savings back should the worst happen and so in this respect your savings are quite safe.

Other Saving Vehicles
The other popular form of saving in the UK is to invest in Premium Bonds from National Savings & Investments. These bonds are one of the safest places to put your money as the scheme is backed by HM Treasury. Admittedly you don’t get the interest payments that you get from banks and building societies but you have absolute security for your savings. For those that are dubious about the current state of the banks and building societies then this is the place to go.

The only other risk to your savings comes from none other than you! If you’re a natural spender, like the majority of the population are, then your savings probably aren’t that safe and you might want to think about investing in Premium Bonds or opening a savings account that requires you to give at least 30 notice for withdrawals. These two methods are great ways to curb the spending urges while keeping your savings safe and sound.