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.
Savings Account Safety: Simple Tips to Protect Your Money
Ever wonder if your savings are really safe? In the UK most banks are covered by the Financial Services Compensation Scheme (FSCS), but that protection only kicks in under certain conditions. Knowing the rules and spotting red flags can save you stress later.
First, check if the institution is authorised by the Financial Conduct Authority (FCA). An FCA‑authorised firm must display its registration number on the website and in any correspondence. If you can’t find that information easily, treat the offer with caution.
Understand What the FSCS Covers
The FSCS protects up to £85,000 per person, per authorised firm. That means if a bank fails, you’ll get your money back up to that limit. If you hold accounts at multiple banks, each one gets its own £85,000 protection, so spreading your savings can increase total coverage.
Keep in mind the protection only applies to deposits, not investments like stocks or bonds. If a product is marketed as a “savings‑linked investment,” it may fall outside the FSCS safety net. Read the fine print or ask the provider directly.
Practical Steps to Keep Your Savings Secure
1. Use strong, unique passwords for online banking and enable two‑factor authentication wherever possible. A simple password trick is to combine a phrase you’ll remember with a few numbers and symbols.
2. Regularly review your account statements. Small, unexpected withdrawals can be the first sign of fraud. Set up alerts for any transaction over a certain amount – most banks let you customise these notifications.
3. Beware of phishing emails or texts that ask for your login details. Legitimate banks never ask for passwords via email. If something looks odd, contact the bank using a phone number from its official website.
4. Consider using a credit union or building society if you prefer a smaller, community‑focused institution. They are also FCA‑authorised and covered by the FSCS, but often have tighter member controls.
5. If you have a large sum exceeding £85,000, think about splitting it across several banks or using a combination of cash ISAs and regular savings accounts. This way each portion stays within the protection limit.
Finally, stay updated on any news about your bank. Major financial news outlets will report if a bank is in trouble, and the FCA will publish warnings. Acting quickly when a problem emerges can help you move funds before a formal insolvency process begins.
Keeping your savings safe isn’t about being paranoid; it’s about being informed and using the tools the system provides. By checking authorisation, understanding the FSCS, and practising good online hygiene, you can rest easy knowing your money is as secure as possible.
