FSCS + Bonds + Savings = Confused. Need advice

Cannonf

Firstly I know there are other such posts, but reading some & I'm getting even more confused, but lets get a little bit of background in first & then explain my confusion

I'm not a home owner, don't have many large regular outgoing expences (TV bills, car running cost etc - nothing major) & don't socialise much, so my savings are in pretty good shape


I also had a lot of money split into many different bank accounts (TSB / Baclays / Natwest / Cash isa's etc) & was getting 'lost' which money was where since I only ever used the one account for everyday spending (Natwest) & I never stuck any money into any of the other accounts/isa's.
So I (in hindsight now stupidly) thought I'd close everything I wasn't using & stick it all into one place (in this case my everyday account at Natwest)



Imagine my surprize that once that was done, I ended up with > £150,000


Now I understand that the FSCS only covers a MAXIMUM of £85,000 in savings for a single account in any single institute (for a single person) , so if Natwest ever goes bust I will only be able to get £85,000 back & I've technically 'lose' the remaining money



That part I understand, so I'm now thinking what's the best thing to do..


I don't want to start opening multiple bank accounts with other banks again, cos the money will just be sitting there doing nothing & I'll be back to my original problem of losing track where my money, so I thought I could stick the 'excess' into bonds instead & then maybe cash them in towards buying a house or re-invest when they 'expire'



Now here's where I'm getting confused


IF I open a Natwest 'Fixed term Savings Account Bond' (a lump sum tied up for a fixed number of years) - does this count towards my £85,000 'limit' if the bank goes bust ? or are 'bonds' counted as seperate from the banks 'savings' protection

I've read that FSCS protects against 'savings' up to £85,000 but it doesn't protect 'bonds' yet Natwest is a 'Savings Bond' - so what is it exactly ?

If this a 'BOND' what would happen if Natwest went bust - would I get my bond money back or would I just lose it ?

My alternative is to open a Fixed Rate Bond in another bank (not associated to Natwest - such as Nationwide perhaps ?) - let's say fot the max £85,000 protectio, so IF Nationwide or Natwest ever goes bust I can claim my maximum limit back from whoever went bust & not lose anything at al (In theory)
- however this then leads into another problem.


At some point my everyday account (Natwest) will eventually get back up to £85,000 (unless I eventually buy a house/get a morgage etc) meaning I'd be back at square one..

except this time I would'nt be able to open another 'Fixed bond' in Nationwide (IF these type of 'bonds' are covered by FSCS) since I would already have the max limit in an existing bond meanig I would have to look elsewhere - open in another bank & I'm back at square one with money scattered all over the place ... again

Unless I am totally wrong about how 'savings' and 'bonds' are protected by FSCS (or not)

Can someone clear up my confusion (in VERY simple terms preferably) on what's the best way to protect all my money in as few places as possible
Many thanks in advance

masonic

It is confusing that some banks refer to savings products as 'bonds', which are still bank deposits protected by the FSCS. Whereas others offer bonds that are not savings products and are actually investments - some of them quite risky.

All fixed rate savings products will specify whether FSCS protection applies and most make you confirm you've been informed of this when you apply for the product.

What is the purpose of having these savings? If they are long term then you should be concerned about their value shrinking due to inflation.

dunstonh

IF I open a Natwest 'Fixed term Savings Account Bond'

Often its worth classifying products by their generic name and not their marketing name. That is a fixed term deposit (not a bond. Bond is their marketing name and should not be confused with actual bonds).

A fixed term deposit falls under the deposit protection scheme run by the FSCS.

Whereas actual bonds have no FSCS protection (unless put in place under advice or held collectively in a regulated unit trust/OEIC. And that ignores other misnamed bonds like Investment Bonds)

Alexland

While it is a nice surprise to find out your accounts add up to £150k it is worth using a spreadsheet to keep track of your account balances.

With that amount in cash, unless you intend to spend it in the next 5 years (eg on a home?), it is worth investing some in mainstream and suitable risk profile S&S funds so that it has a better chance of maintaining its spending power relative to inflation.

Alex

eskbanker

Cannonf wrote: »

Imagine my surprize that once that was done, I ended up with > £150,000

Which was nice.

LHW99

So a NatWest savings deposit ("bond") will count towards your £85,000 limit if the rest of the money is also with them.
National Savings (NS&I) is covered by the Government, so I don't think the £85,000 limit applies for them. They have savings accounts, savings certificate, cash ISA's etc. If you find investments (stocks & shares) are too worrysome for you, you could have a look at NS&I products, and see if a range of their offerings would appeal.
https://www.nsandi.com/
(They used to be the Post Office Savings Bank)

david78

With £150k you only need 2 accounts to stay within the £85k limit per license. You may need more accounts to maximize the interest earned. A spreadsheet is a good tool for keeping an eye on where the money is.


The "bonds" you refer to are just fixed-term savings accounts so they count towards the FSCS limit. Any savings with NS&I don't count and are fully protected.


If you need to make a claim with FSCS an instant access account should be paid straight away. With a fixed-term account, the term will be honored to the end of the savings contract (1 year, 2 year ...) and the interest paid as per the contract (annually, on maturity).

masonic

david78 wrote: »

If you need to make a claim with FSCS an instant access account should be paid straight away. With a fixed-term account, the term will be honored to the end of the savings contract (1 year, 2 year ...) and the interest paid as per the contract (annually, on maturity).

I believe what has happened in practice is customers are given the option to break the contract and receive an immediate payout of capital + accrued interest or see out the contract.

Cannonf

LHW99 wrote: »

...National Savings (NS&I) is covered by the Government, so I don't think the £85,000 limit applies for them. They have savings accounts, savings certificate, cash ISA's etc.....

And there's me thinking all they did were those premium bonds XD

I've had a [quick] look & somehow I don't think the FSCS does cover NS&I like you suggested -
.. After all looking at some of those (such as the 'Direct Saver/ Investment account / Income bonds) - these have a maximum limit per person of £1mil > £2mil, so how would the FSCS cover that amount ... lol

The ones I've mentioned seem my best bet (although the Income Bond seems slightly better) as I can stick & take money in/out whenever I like (for any sudden 'cash emergencies'), get a small monthly 'income', & has 'fair' interest rate (although it would be variable) - also there's no upper limit to worry about (Can't see me ever having £1mil pounds stashed away).

I guess I could stick a lump sum in one of those to get my Natwest below the £85,000 - have to use internet banking (not something I've really got into - only used it in past to check my statements), & then keep topping up (IF) Natwest gets a little too high...

Not found anything about what type of protection it have on their site, but on moneysaving site I did find this article

Savings invested with National Savings and Investments (NS&I) are protected in full as NS&I is backed by the government.
That means if you have £250,000 invested there, it will be protected, so you don’t have to restrict the amount you save to £85,000.
However, it’s worth noting that NS&I’s accounts don’t tend to pay the most competitive returns, so stashing all your savings there just because of the protection offered is unlikely to be a sensible strategy./

Can't see the goverment suddenly going bust (despite UK's current Brexit situation) & I'm not too fussed about getting 'high returns' (it's all taxed regardless - you're taxed on money earned & taxed on money saved & taxed on interest made etc) but if I was, I could always open a Guarenteed Income or Growth bond with NS&I

Many thanks to all for their posts - some of the info has helped

masonic

Cannonf wrote: »

I've had a [quick] look & somehow I don't think the FSCS does cover NS&I like you suggested -
.. After all looking at some of those (such as the 'Direct Saver/ Investment account / Income bonds) - these have a maximum limit per person of £1mil > £2mil, so how would the FSCS cover that amount ... lol

The FSCS does not cover NS&I, and LHW99 didn't state that it did. NS&I is backed by HM Treasury, which is a stronger guarantee than the FSCS, and one that is not limited.