The new Financial Services Compensation Scheme (FSCS) compensation limit today increases from £50,000 to £85,000 per person, per authorised firm.
This new limit is the Sterling equivalent of the €100,000 deposit compensation limit which has come into force in all European Economic Area (EEA) member states.
Earn more interest and keep your savings safe
There’s an added bonus to the increase in compensation limits – some accounts pay a higher rate of interest the more you deposit. As you can now save an extra £35,000 without losing your FSCS cover, increasing the amount you have in your savings account could give a boost to the interest rate you earn.
For example, if you had under £50,000 in Bath Building Society’s Wessex savings account, you’d have been earning 0.75% in pre-tax interest. However, now that you can safely put up to £85,000 into the account and still be covered by the FSCS, you could earn almost double on the same account as the interest rate jumps to 1.45% on balances over £50,000.
It’s worth remembering though that you could get a much better rate still just by switching to a Which? Best Rate savings account. Use our Saving Rates Booster to see how much you’re currently earning on your savings account and how much extra interest you could be earning by switching to the best account on the market.
Further changes coming into effect today
A number of other FSCS reforms come into force today:
- Fast payout rules, with a target of a seven day payout for the majority of claimants and the remainder within the required 20 days
- Gross payout, which protects customers by ringfencing their deposits if they have savings and loans with the same firm. Currently, any outstanding loan or debt would be deducted from any compensation
Find out more about savings protection under the FSCS
For full details of how your savings are protected, including a guide to which banks and building societies have separate banking licenses and which only offer one lot of £85,000 cover across all their brands, read the Are my savings safe? advice guide.
To find out how much extra interest you could be earning on your savings, try out the Which? Savings Rate Booster and start the switching process today.
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