MSE News: Safe savings limit to fall by £10,000 to £75,000 from January 2016

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  • SnowMan
    SnowMan Posts: 3,365 Forumite
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    It doesn't make any sense to me changing the limit by such a small amount. It just un-necessarily complicates things. If a bigger change was needed because of the exchange rate perhaps fair enough, but not this nonsense.

    The argument that it only affects a small number of savers is silly; if it only affects a small number of savers then there is no need to change it.

    Keep a simple consistent message your savings are safe up to £85,000 per institution. No need to complexify.

    Good news if you own Post Office shares, with all the letters needing to be delivered, 'did you know the compensation limit is changing' for old savings accounts from years ago with only 1p in them and that couldn't easily be closed down.
    I came, I saw, I melted
  • guitarman001
    guitarman001 Posts: 1,052 Forumite
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    So who has more than that in savings and what do you think, and what are your plans?
  • eskbanker
    eskbanker Posts: 31,556 Forumite
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    colsten wrote: »
    As an aside, there's no such thing as "government money" either - only taxpayer money that the government spends.
    I know the point you're making but am unconvinced it's really valid, we all (well, most!) pay taxes to the government but that doesn't mean it's still our money after that just because that's where it originally came from. The references to "taxpayer-owned" banks always jar with me, nobody ever seems to consider it necessary to say taxpayer-owned schools, hospitals, fire stations, warships or whatever! So, I'd say that there is such a thing as government money, while accepting that most of it is indeed sourced from taxpayers....
  • talexuser
    talexuser Posts: 3,500 Forumite
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    So who has more than that in savings and what do you think, and what are your plans?

    Say your ISAs and pensions are maxed out every year so have no low risk (cf VCTs etc) ways of tax efficient investing further without going straight into 40% tax territory, which when you work it all out seems hardly worthwhile. I will have to reduce a couple of accounts by 10k but need cash to pay 40k/annum care home fees for my mother and intend to use the unwrapped 5k dividend allowance next year and then accept the need to sell and re-buy non-wrapped funds every so often to minimise capital gains tax.
  • grey_gym_sock
    grey_gym_sock Posts: 4,508 Forumite
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    colsten wrote: »
    As an aside, there's no such thing as "government money" either - only taxpayer money that the government spends.

    the £ is fiat money, i.e. it is nothing but an IOU from the government. a tenner is a promise from the BoE to pay the bearer on demand ... to pay them what? another tenner!

    if the government didn't spend money into the economy in the first place, taxpayers wouldn't have any ££, and nobody would be able to pay their taxes!

    it is therefore all government money.
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    eskbanker wrote: »
    The references to "taxpayer-owned" banks always jar with me, nobody ever seems to consider it necessary to say taxpayer-owned schools, hospitals, fire stations, warships or whatever!
    Perhaps they should start doing so, to distinguish them from the PFI-company-owned schools, hospitals, fire stations, etc. These are also taxpayer-funded, but in arrears, and over a longer timescale.
    Eco Miser
    Saving money for well over half a century
  • JohnRo
    JohnRo Posts: 2,887 Forumite
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    the £ is fiat money, i.e. it is nothing but an IOU from the government. a tenner is a promise from the BoE to pay the bearer on demand ... to pay them what? another tenner!

    if the government didn't spend money into the economy in the first place, taxpayers wouldn't have any ££, and nobody would be able to pay their taxes!

    it is therefore all government money.

    Banks create credit out of thin air, it is a monumental fraud.

    If it's all government "money" then why are they charging the country interest on their own borrowings and why the national debt?

    FSCS is little more than a confidence trick that works as long as TBTF is being maintained at everyone else's expense.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • grey_gym_sock
    grey_gym_sock Posts: 4,508 Forumite
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    JohnRo wrote: »
    Banks create credit out of thin air

    true. that is how bank lending works: when a bank gives a customer a loan, they create 2 accounting entries "out of thin air": the customer's debt to the bank, and an equal credit in the customer's deposit account; and the latter is new money.

    my point was more that the government/BoE can create £ if they choose to do so. for instance, they did so in the QE programme.

    also, that the £ has a value because of the government's actions. it accepts ££ in payment of taxes, and just about everybody pays taxes, hence ££ is a useful store of value. even if you have no taxes to pay, your saved £ will be useful to somebody else, so you can use it to buy something else.
    , it is a monumental fraud.
    well, to be clear: it's perfectly legal (unlike many of the other things banks regularly do). banks are legally allowed to create money in this way.

    but is it the best way to create money? IMHO, no (see below).
    If it's all government "money" then why are they charging the country interest on their own borrowings and why the national debt?
    the government could, and IMHO should, be partly funded by money which it creates, instead of by debt.

    the QE programme didn't quite do that. however, it has resulted in c. 25% of outstanding government debt being held by BoE, so although interest is paid on this, it is then passed back to the government. the real effect is that both outstanding debt and interest paid are c. 25% lower than they are claimed to be.

    the better way to create new money would be via what has usually been called Green QE (though jeremy corbyn has been calling it People's QE). this would use the new money not to buy up existing government debt, but actually invest it in green infrastructure projects. IMHO, this is the key economic policy which could transform the UK economy.

    however, i wouldn't worry about paying some interest on the 75% of the existing debt which the BoE doesn't own. it is actually useful for many ppl/organizations to be able to save money in something as stable as government debt. if the interest rate is low enough, and the debt-to-GDP ratio doesn't get too high, then the debt isn't a problem, and it never needs to be repaid. currently, the ratio is not dangerously high in the UK. and interest rates are very low.
    FSCS is little more than a confidence trick that works as long as TBTF is being maintained at everyone else's expense.
    i partly agree with that. banks being allowed to take excessive risks pushes up the costs of the FSCS, and of likely future government bailouts when banks go bust again.

    the banks should be compelled to refrain from engaging in a lot of dangerous speculative activity. and to do a bit less lending to buy property (some of this is OK, but too much just drives up property prices). and more lending to SMEs (their net lending to SMEs has been negative in recent years).

    legally, the banks create money and lend in the way they do because the government allows them to. i'd like the government to regulate them differently. but i have no problem with the general idea of fiat money.

    politically, it is the banks who appear to control the government. which is a problem.
  • cannonballdaze
    cannonballdaze Posts: 71 Forumite
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    edited 24 July 2015 at 4:57PM
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    Yodaboy wrote: »
    So if you have opened an ISA this year, transferred in and have over £75k in it, what can you do to protect the extra?

    I'd like an answer to this too - I can't open another ISA until April 2016 and yet any money over £75k isn't protected after Jan 2016.

    Did they think this through ?

    Any suggestions please ?

    Cheers - Joe
  • colsten
    colsten Posts: 17,597 Forumite
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    You can open as many ISAs as you like, and transfer part of your cash ISA. Only thing you cannot do is pay new money into more than one cash ISA in the same tax year.

    In case you don't know, you must ask the new provider to make the transfer.
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