How safe do you stick to the 85K FSCS Protection? 12 November 2022 at 3:16PM in Savings & investments 34 replies 2.3K views

caring

What are the feelings of staying within or at the 85K Protection limit?  How far would you stray beyond it to gain a 0.05% interest compared to opening an extra new account with 0.05 less interest, so you are the splitting funds between 2 accounts?

subjecttocontract

I wouldn't stray past £85k unless my interest at end of year pushed it beyond £85k. 

JGB1955

I currently have £84,500 with Paragon and am quite comfortable with that, particularly since the interest is paid to my link current account every month.  

£85K at (say) 4.05% = £3,442.50.
£85K at 4% = £3,400.00

If I were to pay in £100k the difference in interest would be £7.50, but I would be putting £15k at risk.  I just wouldn't bother.

Band7

subjecttocontract said:

I wouldn't stray past £85k unless my interest at end of year pushed it beyond £85k. 

I always leave enough room to stay below £85k, even with interest 

jaypers

In the world as it is right now, why would anyone be crazy enough to take any risk? 

subjecttocontract

Well if you start with £85k and your interest is paid at the end of the year and you reduce the balance back to £85k immediately then your excess is at risk for a very short time.

Presumably if the bank went bust 10 months into your 1 year account......you wouldn't get the interest payment anyway !

Albermarle

The risk is minimal, but as you can avoid it then you might as well.
Also many posters on here are chasing best rates, often with relatively small and not well known institutions, so more reason to be safe rather than sorry.

Band7

subjecttocontract said:

Well if you start with £85k and your interest is paid at the end of the year and you reduce the balance back to £85k immediately then your excess is at risk for a very short time.

That plan wouldn’t work very well with fix term accounts which run for more than 12 months.

subjecttocontract said:

 
Presumably if the bank went bust 10 months into your 1 year account......you wouldn't get the interest payment anyway !

In the 2 cases I needed FSCS, the balances returned included interest up to the day of default. Though I believe this isn’t necessarily always guaranteed.

wmb194

It would depend on the bank/bs.

caring

Albermarle said:

The risk is minimal, but as you can avoid it then you might as well.
Also many posters on here are chasing best rates, often with relatively small and not well known institutions, so more reason to be safe rather than sorry.

Put like that, then makes sense!

caring

Thanks all. Common sense prevails over greed.