split it or risk it?

bigfreddiel

If you had £600k would you risk it in a single savings account for say 6 months max if you knew you would be using it for a house purchase in that time?

fj

malik999

Personally it wouldn't bother me assuming youre not talking about a savings account in Nigeria your heard about from a email.

PasturesNew

I'll admit to not being able to sleep. I broke mine up into £35k chunks in 2007, it was pre-£50k chunks being covered.

On the other hand, it's a pain in the butt finding/opening enough bank accounts.

D1zzy

For such a short term & ease of access -Think I'd stick it all in LLoyds/HBOs - if they go TU, I think the Chinese 'll be taking over the UK.
(as much as you can get away with in their Vantage accounts and then the rest in their Esaver a 2.5% - or the Halifax websaver at 2.8% if you also open a Reward current account)

LongTermLurker

In the months leading up to the fallout, when interest rates were consistently high, I split my money between multiple accounts even though the total was less than the £35k limit at the time. The reason? If one institution failed, I wouldn't be without funds for several months until the FSCS stepped in.

As it was, none of the accounts I chose suffered problems (OK, Kaupthing Edge nearly...) and FSCS/Government stepped in with lightning speed to protect people when necessary. But I still think I was right to do what I did. Managing multiple accounts wasn't difficult and it protects most of your money all of the time.

In OP's case, what's the worst that could happen if you don't split it? No cash at all for 3 months - if that prevented you buying the house, is that a level of risk you're prepared to take?

If you did split it, the worst is that you could have a reduced deposit and need to take out a personal loan for 3 months or so until FSCS coughed up.

edit - I probably wouldn't be looking at opening 12 accounts, but giving yourself some diversity is no bad thing.

bigfreddiel

Thanks to all that replied, I understand its all about risk and how likely is it that one of the big banks goes belly-up in the relatively short term period I'm talking about. So bearing that in mind here goes with my thoughts.

Now I could get 2.9% with a 90 day account with Stroud and Swindon, who merged with Coventry BS on 1st September making them the 3rd biggest.

The halifax offers 2.8% if you hold an account with them, so I could just open a current account, deposit £1 and then I should qualify - just read this on MSE:

"Those earning over £15,000 who pay their salary into Halifax or Bank of Scotland current accounts get 2.8%, As for those in credit the Halifax* Reward account is one of the best buys (see Best Bank Accounts) this is a good deal." Well I could do that I guess - at least I would get away from A&L!

Both offer an over the counter service which makes me feel better when paying in such a large sum or getting a bankers draft (is it still called that) for when I purchase my new property! Old fashioned I know (I do bank online but they have their limits - A&L only allows £25K max to be transferred so I guess all online banking have the same limits).

So whats the difference in interest ().1%) - take a nice round number say £500K and take 0.1%, so after 20% tax its £400 per year! Not a lot but might be worth taking the higher rate.

Any flaws in my logic above - what would you do?

fj

ed123_2

....I would,nt take the risk however it would mean opening at least 12 accounts to get the 50k protection.....another alternative would be to put it in a ns&i direct saver account which only pays 1.75% gross pa but your money is 100% guaranteed.....

bigfreddiel

Well actually, it would be joint account so its only 6 accounts, and checking around I reckon we could get 2.75% - 2.9% on 6 accounts with differnt financial institutions.

D1zzy

bigfreddiel wrote: »

Well actually, it would be joint account so its only 6 accounts, and checking around I reckon we could get 2.75% - 2.9% on 6 accounts with differnt financial institutions.

Don't miss out on 4% on 6 (3 each) x Lloyds vantage with 7K in each :)

bigfreddiel

D1zzy wrote: »

Don't miss out on 4% on 6 (3 each) x Lloyds vantage with 7K in each :)

Good point - lets see 6 times £7K=£48k at 4% = £1536 after 20% tax

and that amount at 2.9% = £1113 pounds - so I'm better off by £423 - not to be sniffed at.

Cheers

D1zzy

bigfreddiel wrote: »

Good point - lets see 6 times £7K=£48k at 4% = £1536 after 20% tax

and that amount at 2.9% = £1113 pounds - so I'm better off by £423 - not to be sniffed at.

Cheers

Except 6x7 = 42 ...... so only £1344 net -
and as your money is there only for 6 months you only pocket half that amount -£672

.. but, plus 3 (1 each + 1 joint) Halifax Reward with 1p in each for £15 per month net = another £90
(your account count is rising though!)