Is my money safe in the bank?

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Following the financial crisis of 2008, the £500 billion government bailout that followed and the economic impact of the coronavirus crisis, people are more concerned than ever before about where to put their savings. While the Bank of England anticipates that the UK economy will be back to its pre-pandemic size by the end of 2024, as a savvy saver, it’s important to educate yourself on whether your money is safe in the bank, what could happen if things go wrong, and how to stay safe when saving online. 

Are UK banks safe?

Yes, your money is safe in the bank. Thanks to the Financial Services Compensation Scheme (FSCS), a statutory scheme in the UK that protects customers of authorised financial institutions, up to £85,000 of your money is protected per person, per banking group – provided that the financial institution is regulated by the Financial Conduct Authority, the Prudential Regulation Authority, or both.

How safe are online banks?

Regulated online banks are safe in the UK. They can help you to keep your money safe online in the following ways*:

  • Using secure login processes like one-time passcodes and two-factor authentication
  • Protecting against fraud with face and fingerprint technology
  • Encrypting data so that only you and your bank can read it
  • Monitoring payment patterns to identify any suspicious transactions
  • Helping you get back any money unlawfully taken by fraudsters

*Security measures may differ between financial institutions.

What is the safest way to save money?

The safest way to save money is to keep your savings in a financial institution that is covered by the FSCS. In order to be covered, it must be authorised and regulated by the Financial Conduct Authority (FCA), the Prudential Regulation Authority, or both.

Secondly, under FSCS protection, up to £85,000 of your savings are covered per person, per banking group, so it’s advisable to split money across accounts held with different banking groups if you have more than £85,000 in savings, as doing so will protect all of your savings. You should also check who owns the banks you want to save with, because if they are ‘different’ banks but are owned by the same organisation, you’ll still only be covered for £85,000 in total.

Therefore, the easiest way to save safely is to stay under the £85,000 per person, per banking group limit and ensure you save with an authorised bank.

There are a few other ways you can save in safety, including the following: 

  • National Savings and Investments (NS&I). All money in the state-owned bank NS&I is fully Government-backed, meaning money deposited is as near to 100% safe as possible. The only way you would lose your money here is if the UK Government goes bankrupt or collapses, which is extremely unlikely.
  • Pay off your debts. Most credit cards and loans cost a lot more in interest than you earn on your savings, so by repaying any debt with your savings, you’ll be better off than before. For some useful tips on this, see our handy guide to paying off debt.
  • Overpay your mortgage. Similar to paying off debt but with a tangible gain on the other side, reducing your mortgage costs is like earning cash as you’ll pay less interest in the long run. By paying off your mortgage, you could also enjoy better deals when it comes to remortgaging.

How can I keep my money safe online?

You can protect yourself when banking online by:

  • Keeping your software up to date
  • Not opening any email attachments or links if you suspect that they’re not genuine
  • Never sharing private information such as passwords or security phrases
  • Creating a strong password and using an online password manager rather than writing down your password on paper
  • Looking after any paper statements you receive
  • Being scam aware: be wary of fraudulent phone calls and remember banks will never ask you to transfer money to another account

How to spot and avoid online banking scams

Spotting scams and being alert to any suspicious activity is extremely important when banking online. Financial scams are still an all-too-common occurrence in the UK, with the majority of scams beginning online, according to research carried out by UKFinance in 2023.

A frequent scam at the minute sees criminals promoting popular savings accounts such as fixed rate bonds and ISAs on fake, or cloned, websites in order to steal money and sensitive information from would-be savers. Find out how to spot these scams.

Explore our online safety guide for more useful tips and information, including how to spot a phishing email and how to check a website is legit.

What is the FSCS?

The FSCS stands for the Financial Services Compensation Scheme, and it’s designed to compensate you in the event of your financial institution failing. It covers a range of financial products, including deposits, pensions, investments, bank accounts, mortgages and insurance. 

It can also compensate you if your financial institution has given you misleading advice and has since closed down. The FSCS is a free, independent service set up by the UK government. It’s important to note that the FSCS doesn’t cover some financial products, and they may limit the amount of compensation you can receive.

Is online banking covered by FSCS?

If you bank with a UK-authorised institution, online banking services are protected. The way you bank doesn’t make a difference. The important thing is that your bank is covered. Find out more about the safety of online banking.

Which banks are linked?

It’s common for one financial institution to own multiple banks in what’s known as a banking group, meaning that the banks within a group are linked together, as is the case of Bank of Scotland, Aviva and Halifax, as noted in the list above.

To ensure that all your money is covered by the FSCS (because up to £85,000 of your money is covered per person, per banking group), you’ll need to know who exactly owns each institution you bank with. You can find this out by searching online for ‘who owns who in banking’. 

What should I do if my bank collapses?

In the unlikely (but not impossible) event that your bank collapses, you should make a claim with the FSCS as soon as possible

To progress your claim, your banking institution will need to be authorised – so the first thing you should do is check that this is the case. You can do this directly on the FSCS website using their bank & savings protection checker.

Is my money protected in an offshore savings account?

Money saved in an offshore account usually isn’t covered by the FSCS, meaning your money won’t be as protected. However, some offshore locations including Jersey, Guernsey, Gibraltar and the Isle of Man, now have their own financial compensation schemes, so some of your savings might be guaranteed if your provider goes under.

How to choose a bank that won’t fail

Ultimately, you can’t determine whether or not a bank will fail, and there’s no real way to determine the likelihood of this happening. What you can do, however, is mitigate your risk of losing savings by spreading them out across different authorised institutions.

What does Raisin UK do to ensure my money is safe and protected?

Keeping your money safe and secure is our top priority. Here are some ways we keep your money safe:

  • We’re authorised and regulated by the FCA (FRN: 813894), and we only work with banks that are protected by the FSCS (or the European equivalent), so you can deposit, manage and save with absolute confidence.
  • Money held in your Transaction Account, provided by ClearBank, is also FSCS protected, so your money is still protected when transferring to and from your Transaction Account to savings accounts held on the Raisin UK marketplace
  • We use Secure Sockets Layer (SSL) and Transport Layer Security (TLS) technology for server authentication and data encryption, to ensure that your personal data and all communications sent through your Raisin UK Account are 100% safe and secure

Find out more about how we keep your money safe at Raisin UK.