Bank savings accounts vs. NS&I : which one is the safest ?

max11

Hi All,

I have a savings account that pays almost no interest after a recent change. I am thinking of moving the money (under £85k) to NS&I (where I already got something invested with) to get a decent return, but I wonder if I should keep it with the bank just not to put all the eggs in one basket.

I am aware that bank accounts are protected by the FCSC, while the sums invested with NS&I are 100% backed by the Treasury. 

The two protections are different: which one do you think is the safest protection ?

Thank you

Max

eskbanker

How would you identify and evaluate degrees of safety and protection in this context?  Seems to me that either your money is safely protected or it isn't....

Stubod

..I would assume that they are both the same levels of protection, just go with the highest rate...

max11

Thank you guys. As far as I can understand, the FCSC is funded by levies on financial firms, while NS&I would get the funds directly from the Treasury

eskbanker

max11 said:

Thank you guys. As far as I can understand, the FCSC is funded by levies on financial firms, while NS&I would get the funds directly from the Treasury

Indeed, but FSCS (why do so many people refer to it as "FCSC" btw?!) ultimately has access to Treasury funds too if necessary, and hence their statement at https://www.fscs.org.uk/about-us/

We’ve recovered £20 billion from the 2008 bank failures and repaid all £20.5 billion borrowed from HM Treasury that year.

Albermarle

If your current bank is a high st one then you could also look at other smaller banks who normally pay better rates, especially if you can have the money tied up for a year or two.
They are all covered by the £85K compensation just the same .
https://moneyfacts.co.uk/

digalumps

There is a definite but subtle difference...

With NS&I it will never fail so there is no question of you having to apply for compensation or anything like that

With fscs protection the bank fails and then you have to apply for your savings money back this will take a short time I believe but nevertheless it is something you have to do

eskbanker

digalumps said:

With fscs protection the bank fails and then you have to apply for your savings money back this will take a short time I believe but nevertheless it is something you have to do

https://www.fscs.org.uk/what-we-cover/banks-building-societies/ disagrees:

If you hold money with a UK-authorised bank, building society or credit union that fails, we’ll automatically compensate you.

[...]

You don’t need to do anything – FSCS will compensate you automatically.

dave1345

The main advantage with NS&I is that all your money is protected and not just the first £85k. That means if you like their products and want to put more than £85k in then you can do that without worrying you might only get £85k back.

It's difficult to imagine a situation where the government wouldn't be able to pay back your money. Not even the current high level of government spending is cause for concern.

max11

Thank you all for the sensible inputs

max11

eskbanker said:

Indeed, but FSCS (why do so many people refer to it as "FCSC" btw?!)

LOL