Short-term money storage

furtivefellow

Hello everyone,

I was wondering if I could grab some input on an upcoming financial scenario. I bought my house in the lull, just over three years ago - and now have a buyer for 30% over what I paid; dumb luck on the timing. We're staying with my folks between sale and purchase to break the chain and reduce stress. I've also been lucky enough to receive some inheritence, so between the sale and the purchase, I'm going to have 145k knocking around.

This makes me incredibly nervous, as I've never had more than a couple of grand in the bank and an 'emergency' fund in an ISA. I've also had my card cloned in the past, which was refunded by the bank.

I'd like to keep the money safe for the few months it will be cash - I was thinking about opening a couple of bank accounts and storing half in each, never using the cards. You're only covered in the event of a bank failure up to 80k, so it seemed sensible. I appreciate that it probably sounds very silly and paranoid to expect a bank to fail, or that my account would be cleared out.

Does that sounds remotely sensible?

Thanks in advance,
Henry.

Paul_1977

I would not use bank (do you mean current) accounts, use isa accounts with different banks.

Bank accounts come with cards and once the card is linked you have the hassle of reporting it lost to get it unlinked.

Perhaps put 25k in premium bonds, the people that win big have big. It can take upto seven days to get your money paid back out, but its safe.

alanq

Possibly relevant?

"Increasing the FSCS limit from £85k to £1 million for temporary balances – from 3 July 2015."

http://www.moneysavingexpert.com/news/savings/2015/04/new-rules-to-protect-savers-if-their-provider-fails-have-been-confirmed

furtivefellow

Both great replies, thank you. Is there a reason not to put it all in premium bonds?

DeepSporran

furtivefellow wrote: »

Both great replies, thank you. Is there a reason not to put it all in premium bonds?

The maximum amount you can out into Premium Bonds is £50,000 I'm afraid.

DeepSporran

Paul_1977 wrote: »

.............. use isa accounts with different banks....

The OP only wants to park the cash for a few months, so ISA accounts will be of limited use as you can only save £15,240 per year.

Dird

Put the money in my account and I promise a 11% return by the time you need it back

Paul_1977

DeepSporran wrote: »

The OP only wants to park the cash for a few months, so ISA accounts will be of limited use as you can only save £15,240 per year.

Oh sorry, forgot about those limits.

I would suggest standard easy access savings accounts. With no cards attached, Most banks have them and can be opened within minutes online.

I would not worry about the banks going bust, if it gets to the point where the government has to pay you back we may well all be in trouble.

EssexExile

When we were in the same situation several years ago we just split it between two savings accounts, that was when savings accounts paid better than current accounts.
When we eventually bought a house 9 months later we, as you do, really stretched our finances to buy the house. We had completely forgotten that that money was earning interest, so it was a nice surprise to find we could actually afford to eat when we moved in.

agrinnall

My usual recommendation, and I see no reason to deviate from that, is a NS&I Direct Saver account - instant access, 1.1% interest, and protection for up to £2 million.

Archi_Bald

Paul_1977 wrote: »

I would not worry about the banks going bust, if it gets to the point where the government has to pay you back we may well all be in trouble.

Paul_1977, what you posted there is one of the worst and most irresponsible bits of "advice" I have ever read on MSE.

It is true that if all the UK banks went bust in one go, we'd have massive trouble but that is no reason whatsoever to not protect yourself against the insolvency of one or two companies. After all the education people have been given about the FSCS, and after all that's happened, it is staggering that anyone would say you don't need to worry. It's as staggering as saying you don't need to think about building insurance as we'd all be in trouble if all houses collapsed.

As alanq has already posted, there is a £1m FSCS protection for temporary funds. If the temp protection isn't suitable, it is highly advisable to either split the cash into £85K (£75K from January 16 onwards) junks, or to place it with NS&I.

BTW, the FSCS isn't a government scheme, and the government doesn't have to pay anyone anything back.