Some basics I missed at school!

JimJamMum

Please forgive the naivety of these questions.

I have £260,000 to put into savings. This is money to buy a house and so I'm unsure how long I will need it to be tucked away for but I would like it to work while it's waiting! 

I also have £50k of premium bonds and £20k in an ISA so I'm really just looking at savings accounts. As I'm unsure how long finding and buying a house will take, I can't have a fixed term account and I'm reluctant to have an account that needs a long period of notice before withdrawals in case I have to move quickly to secure the house. Seems like Easy Access accounts are the best for me, right?

So, here are my questions.

1. If I go for an account with annual interest payments but my money only lasts six months in the account, how will I know how much interest I have earned and will I still be paid it when I close my account? Would it be better for me to get monthly interest then?

2. I know that my money is only protected to £85k by the FSA, so I guess I need 4 accounts...but I can't (usually) have 4 of the same product at a single bank/bs. Is this right? Am I allowed 4 savings accounts?

3. What haven't I considered? I'm in panic mode!

Thank you!

molerat

You need to not exceed £85K in any single or linked institution.  List of banking and savings brands protected by the same FSCS coverage complied by the Bank of England as at 11 June 2021

You can have as many savings or current accounts as you wish within the rules that each bank sets, some allow multiples of the same type of account and some don't.

It doesn't really matter if you choose monthly or annual interest as the account will be made up when you close it.

eskbanker

JimJamMum said:

1. If I go for an account with annual interest payments but my money only lasts six months in the account, how will I know how much interest I have earned and will I still be paid it when I close my account? Would it be better for me to get monthly interest then?

Any outstanding interest will be paid when closing the account, regardless of scheduled frequency of crediting.

JimJamMum said:

2. I know that my money is only protected to £85k by the FSA, so I guess I need 4 accounts...but I can't (usually) have 4 of the same product at a single bank/bs. Is this right? Am I allowed 4 savings accounts?

The FSCS limit is per bank not per account, so you effectively need to find accounts at four separate banks, or to be more accurate, four separate banking groups:

https://www.moneysavingexpert.com/savings/safe-savings/

The £20K in your ISA would also count towards this limit, i.e. if you have a non-ISA account with the same bank you could only save £65K in it in order to be protected.

Olinda99

the alternative would be to put the full 260,000 into an NS&I direct saver account - it would be fully protected but I believe the interest rate is not the best you can get

JimJamMum

Right, you all noticed my 'deliberate' mistake...errr. FSCS not FSA!
Thanks for the information re not having the accounts in the same bank. That makes sense.

LHW99

If this is temporary, there is additional FSCS protection see:

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

droopsnoot

You should check the terms and conditions of whichever account(s) you pick - of course - as you might find that some will only pay interest if you leave the money in for the full term, and if you need to remove funds early you may lose all the interest. I'd expect it would be obvious when you apply for the account.

Albermarle

Easy access comparison site here . All are covered by FSCS .
Best Easy Access Savings Accounts | Up To 5.20% (moneyfactscompare.co.uk)

Click on 'Rate Order' - top left of the screen, to get the full list.