Credit Crisis FAQ

tradetime

saving_novice wrote: »

Hey - i was wondering if anyone could tell me whether high interest fixed term bonds from banks are covered in the same way that standard savings in savings accounts are, or do they work more like shares?

Any info would be useful.

Thanks

They are savings accounts, and thus covered like any other savings.

scott_lawrence

As the interest rate on my ISA is similar to that I would get if I were to put the money under my bed I've thought about buying shares in a bank, such as Barclays, as the share price is very low. If they get nationalised what wil this mean to the value of my shares?

Scott

Reaper

There are a bunch of threads on this topic in this forum. It is tempting but bear in mind:

1) There could be more shocks to come.
2) Banks may never be as profitable as they were (or rather seemed to be!) before the crash so don't expect historical dividend levels to be maintained.
3) Shareholders can expect to lose most or all of their money if a bank gets taken over by the government (eg Northern Rock).

You could make good money but bank stocks are priced low because they are perceived as risky.

rootie_2

hope this question is not on here already, i couldn't see it but...
i have a tracker rate mortgage from may which i am very happy with bur my savings are with the same bank and offset this, this too i am happy with. Bank is Barclays. if the worst were to happen, would my savings be used to pay off my mortgage and this new lower debt transferred or would i still have some savings?

Reaper

The FSCS says "Amounts owed to a failed bank (for example loans, mortgage or credit card debts) are taken into account before any compensation is paid."

So you would not receive compensation for your savings. Instead they would pay off a chunk of your mortgage. In practice it might be the case your mortgage gets sold on to another provider who would keep it going as an offset, but that's not guaranteed.

btm_2

I have money in the post office (Bank of Ireland), and a mortgage with Bristol and West which is larger than my savings.

If the Bank of Ireland goes bust, and Ireland doesn't compensate me, does it mean that my debt to Bristol and West is automatically reduced by the amount of my savings? (Bristol and West is owned by Bank of Ireland, and Bank of Ireland is covered by the Irish Deposit Protection Scheme).

If they were two UK organisations, then I know this is what happens, the irish FSA web site is not so clear. They talk about offsetting, as if its something we wouldn't want, but worst case, I'd prefer it.

anyone any idea?

thanks

Jake'sGran

scott_lawrence wrote: »

As the interest rate on my ISA is similar to that I would get if I were to put the money under my bed I've thought about buying shares in a bank, such as Barclays, as the share price is very low. If they get nationalised what wil this mean to the value of my shares?

Scott

I was thinking of buying shares too. There are just a few that don't seem to have lost much, but Martin was on TV in the last day or so getting responses from three different professional types. They didn't seem to think that shares were a good idea but I am still tempted to buy small quantities regularly. Last year I started spreading my capital around in various bank and building society bonds paying from 7.1% to 5.5%. Most of them mature in the summer so I have some time to decide.

Did you read about the Japanese gent who put all his money in a hole in the ground in his garden? It seems that they really distrust the banks in Japan. Somehow, the secret got out and its all gone - the equivalent of a few million £s in Yen. Has to be a better way.

Reaper

With the collpase of banks slowing I was thinking of asking for this thread to be removed. Unless people say I'm jumping the gun I'll write to the mods to ask them to un-sticky it on Thursday. Shout if you disagree.