How to recession-proof your finances The recession and savings
Which? Archive
This article, How to recession-proof your finances, was last updated on 05 February 2010 and is now out of date and held in our online archive for reference. Explore our latest Money articles.
Savings rates have fallen
In the recession, you may be more concerned about getting the best savings rates and the safety of your savings than before, but there are steps you can take to make sure you're getting the best deals and ensure safety.
Interest rates on savings accounts have fallen dramatically since the credit crunch began
The highest-paying instant-access Which? Best Rate savings account on 13 January 2010 was from Scottish Widows Bank at 3.01% – in April 2008 you could get 6.26% from FirstSave. This means you would earn £260 less in a year on savings of £10,000, after basic-rate tax of 20%.
Recession-proof action
Regularly visit our guide to Best Rate savings accounts, which are updated weekly.
Worries over the safety of savings have grown
When Icesave collapsed in October 2008, customers in the UK would have lost their money had the government not stepped in, as the Icelandic financial compensation scheme did not have enough money to pay out.
As a result, we now exclude all banks that are not completely covered by the UK’s Financial Services Compensation Scheme (FSCS) from the Which? Best Rate savings accounts.
Recession-proof action
Don’t save more than £50,000 (including any interest that might build up) with one banking group. Go to the FSA register to check whether your bank is authorised by the Financial Services Authority in the UK and therefore fully covered by the Financial Services Compensation Scheme. Visit our guide to for more information.
Alternatives to savings accounts now look more attractive
Alternatives to ordinary banks, such as credit unions and ethical banks, have historically not paid comparable rates on savings to conventional options. As savings rates have fallen, alternative savings accounts look more appealing - especially in the recession.
Recession-proof action
Visit our guide to ethical investments to find out more. Visit the Association of British Credit Unions website for more information on credit unions in Great Britain.
Which? money advice RSS feed
For regular money updates, subscribe to the here. If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/advice/money.xml. Find out more about RSS in the Which? guide to news feeds.
Or why not get weekly updates and money saving tips delivered to your inbox by subscribing to the Which? Money Email?
