Is It Safe to Keep a Lot of Money in a Savings Account? Risks & Smart Strategies
Explore whether keeping large sums in a savings account is safe, covering deposit insurance, inflation, liquidity, and smarter alternatives.
Deposit Insurance: What It Means for Your Money in the UK
Ever wondered if your savings are safe if your bank runs into trouble? The short answer is yes – thanks to deposit insurance. In the UK, the Financial Services Compensation Scheme (FSCS) steps in to protect eligible deposits up to a set limit. It’s not a fancy product you have to buy; it’s built into the banking system.
Here’s why you should care: if a bank or building society can’t pay you back, the FSCS pays you straight away, up to £85,000 per person, per institution. That covers most personal accounts, cash ISAs, and even some joint accounts (each person gets their own £85,000). So, a couple could have £170,000 protected at the same bank.
How to Check Your Coverage
The first step is to make sure your provider is FSCS‑approved. You’ll see the FSCS logo on their website or in the terms and conditions. If you’re not sure, a quick search for the institution’s name plus “FSCS” will tell you.
Next, add up the balances of all accounts that fall under the same protection limit. If you have a savings account, a current account, and a cash ISA at the same bank, total them up. Anything above £85,000 isn’t automatically covered, but you can spread the excess across other FSCS‑approved banks to stay within the limit.
Things to Watch Out For
Not every product is covered. For example, certain investment accounts, peer‑to‑peer lending platforms, and crypto‑related services sit outside the FSCS scope. If you hold those, you need to understand the separate risk.
Also, the £85,000 limit applies per institution, not per account. That means if you have two separate accounts at the same bank, they share the same protection bucket.
Finally, keep an eye on changes. The FSCS reviews the limit every few years. A recent review kept the £85,000 figure, but future adjustments could raise or lower it.
In practice, most people won’t need to worry. The vast majority of UK banks have strong capital buffers, and the last big bank failure (Northern Rock) happened over a decade ago. Still, knowing the basics gives you peace of mind.
If you ever hear news about a bank struggling, don’t panic. Check the FSCS website for updates, confirm your coverage, and consider moving any excess funds to another approved institution. It’s a simple step that can keep all your savings inside the safety net.
Bottom line: deposit insurance is a safety net that protects your everyday money. By confirming your bank’s FSCS status, staying within the £85,000 limit per institution, and spreading large balances across multiple providers, you can sleep well knowing that even a worst‑case scenario won’t wipe out your savings.
Got more questions? Think about the types of accounts you hold and run the numbers. If anything feels unclear, a quick call to your bank’s customer service can clear it up. Your money deserves that basic level of protection, and the FSCS makes it happen for free.
