Temporary high balance advice

dancelikeamonkey

Hi. My house sale is due to complete tomorrow and I'll have around £250k sitting in my bank for  3 or 4 months while i find a new property. 

Does the high temporary balance cover protect the money wherever I move it to or just the account it was originally paid in to?

If i can move it my plan was to put £200k into a Zopa pot and the remaining into premium bonds. Does that sound like a sensible, low risk option? 

Thanks in advance.

Gers

dancelikeamonkey said:

Hi. My house sale is due to complete tomorrow and I'll have around £250k sitting in my bank for  3 or 4 months while i find a new property. 

Does the high temporary balance cover protect the money wherever I move it to or just the account it was originally paid in to?

If i can move it my plan was to put £200k into a Zopa pot and the remaining into premium bonds. Does that sound like a sensible, low risk option? 

Thanks in advance.

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

dancelikeamonkey

Hi, thanks I read that but it only mentions cover from the date the payment was received and doesn't mention transferring it from that point and if that affects cover (unless I'm missing that section).

eskbanker

There have been threads about this previously, and as I recall, there was inconsistent advice offered by FSCS but the recommendation was to keep all the money together in the same account (not necessarily the one it was first paid into, but just not fragmented into multiple locations), to ensure a clear and clean audit trail.

However, the forum search function doesn't seem to be working properly at the moment, so I can't locate them....

Edit: found the one I was thinking of, which has been linked to in various subsequent ones:

https://forums.moneysavingexpert.com/discussion/5910251/temporary-high-balance-cover-across-different-banks

Perhaps the key takeaway is that FSCS won't comment on hypotheticals and will only decide on a case by case basis, and indeed the main THB page linked above highlights this, as well as the killer final line that rarely gets much prominence:

If you provide the relevant supporting evidence, we'll pay you compensation within three months.

😮

boingy

Personally I would not worry about it for such a short period of time but if you are then just split it across three accounts - there are plenty of similar rates to be had. If you have a spouse you can transfer half to them to reduce the risk further and possibly save a bit of tax on the interest, depending upon each of your tax circumstances.

dancelikeamonkey

Thanks both. Yeah i tried searching before posting and didn't really find anything which surprised me as the fscs doc was a bit lacking in clarity (to me anyway). But if search isn't working well that might explain it. I can try again a bit later.

I'm trying to avoid splitting it too much. The guy buying my house says he's had a nightmare providing proof of funds as he'd put his money across multiple accounts.

dancelikeamonkey

eskbanker said:

There have been threads about this previously, and as I recall, there was inconsistent advice offered by FSCS but the recommendation was to keep all the money together in the same account (not necessarily the one it was first paid into, but just not fragmented into multiple locations), to ensure a clear and clean audit trail.

However, the forum search function doesn't seem to be working properly at the moment, so I can't locate them....

Edit: found the one I was thinking of, which has been linked to in various subsequent ones:

https://forums.moneysavingexpert.com/discussion/5910251/temporary-high-balance-cover-across-different-banks

Perhaps the key takeaway is that FSCS won't comment on hypotheticals and will only decide on a case by case basis, and indeed the main THB page linked above highlights this, as well as the killer final line that rarely gets much prominence:

If you provide the relevant supporting evidence, we'll pay you compensation within three months.

😮

Ah, thanks for finding that. Ok i think I'll just leave it where it will be paid. It's Halifax so I'll get next to nothing in interest but it feels a bit safer than Zopa. 

Will still put the £50k in PB so at least there's something slightly interesting happening with the money.

eskbanker

dancelikeamonkey said:

Ah, thanks for finding that. Ok i think I'll just leave it where it will be paid. It's Halifax so I'll get next to nothing in interest but it feels a bit safer than Zopa. 

Will still put the £50k in PB so at least there's something slightly interesting happening with the money.

Another option would be to put the whole lot in NS&I products, where they're all fully protected anyway, regardless of movement or fragmentation....

RobfromCornwall

If you really are intent on keeping it all together, what about NS&I Easy Access? - currently 4% AER.  By keeping 200k in (presumably) a current account paying 0%, you're throwing away approx £650 a month (before tax). 

boingy

Looks like you can get 3.9% with Halifax (or 4% if you have the right current account) and it would certainly be the easiest option. The chances of someone like the Halifax getting into difficulty is vanishingly small and even if they did they would be bought by a rival or bailed out by the govt. You've more chance of winning the Lottery than losing the money in the Halifax (but buy a Lottery ticket when the house sale goes through ).

dancelikeamonkey

Interesting, i hadn't thought of that. Daft question (another one 🙂) but if interest is paid yearly I don't need to keep the whole amount in for the year to get the interest on it do I? So as long as i keep the account open with a nominal amount in I'll get .3% per month for the £200k as long as it's there, paid at the end of 12 months?