Your bed is great for many things – but storing your savings certainly isn’t one of them.
Keeping large amounts of money in your house rather than in a bank or building society is a bad idea because:
- Your savings will lose value over time – you won’t earn any interest.
- Theft or fire could wipe out your savings – many insurance policies won’t cover money left in the house and if they do, they only tend to cover a small amount, if you have no contents insurance none of it will be covered.
Worried your money won’t be safe in the bank?
A bank is actually one of the safest places for your money – cash you put into UK banks or building societies (that are authorised by the Prudential Regulation Authority) is protected by the Financial Services Compensation Scheme (FSCS).
The FSCS savings protection limit is £85,000 (or £170,000 for joint accounts) per authorised firm.
It is worth noting that some banking brands are part of the same authorised firm.
If you have more than the limit within the same bank, or authorised firm, it’s a good idea to move the excess to make sure your money is protected.
How to find a safe home for your cash
Step 1 – Set up a bank account
It’s good to have a bank or building society account for everyday needs.
You can then look at separate savings accounts where your spare cash can earn more interest.
You can open an account for free at most banks and building societies, and they should give you all the help you need to do it too.
Step 2 – Find the best place for your spare cash
There are plenty of savings accounts where you can safely put your money and watch it earn interest.
As a general rule, you’ll get better interest rates if you tie your money up for longer.
But, if you know what to look out for you could get a decent return and still have fast access to your money.
Comparison websites are a good starting point for anyone trying to find a savings account tailored to their needs.
We recommend the following websites for comparing savings accounts:
- Comparison websites won’t all give you the same results, so make sure you use more than one site before making a decision.
- It is also important to do some research into the type of product and features you need before making a purchase or changing supplier.
- Find out more in our guide to comparison sites.
This article is provided by the Money Advice Service.