£85k saving protection - does that include ISAs?

TheBanker

What_time_is_it said:

mebu60 said:

Splitting your Cash ISA when you are around £80k is a sensible approach, i.e. don't wait until it's £120k. As long as there is FSCS protection I would prioritise rate and customer service over size of institution. Have you heard of Credit Suisse, formerly one of the biggest banks on the planet? And mentioning Nat West, you know what happened with Royal Bank of Scotland? 

Well quite! But RBS did get full government backing. If the likes of GB Bank ran into problems, would the government bail them out? I do think that size still matters.

There is no absolute guarantee that the government will bail out another bank that gets into trouble, even if it's RBS. It nearly bankrupt the country last time, and there are plausable scenarios where the government would not be able to afford to bail out one of the larger banks (or more than one, given these things are sometimes like a stack of dominoes). Of course in that scenario you may find that even the £85k is worthless. 

You can avoid being in that position by simply moving half of your money to another bank. You might get marginally less interest. On the other hand, if you have £120k and no immediate need to access the cash it could be beneficial to spread it around a few fixed term accounts.