Do you know how much interest you’re getting on your savings? Do you know how much would be protected by the FSCS (Financial Services Compensation Scheme)?
Not long ago few people knew, but with interest rates at an all-time low and the realisation that banks and building societies can go bust, awareness has changed. Most of our clients with larger cash deposits could now answer these questions.
Managing your cash is time consuming. The FSCS limit increased in January 2017 to £85,000*. Good news, but you must be careful because one limit can cover more than one provider. For example, Saga, Halifax and Birmingham Midshires are all part of the Bank of Scotland Group, and share one £85,000 limit.
You may get better interest rates in fixed term accounts. But you have to remember maturity dates and research new options once they mature.
There used to be little that we as Financial Advisers could do to help. Managing cash was so time-consuming that the charges we would have to make would have outweighed the savings.
But all this has changed, because we now have software to help manage your cash. It helps us ensure you get competitive rates, but also checks you keep within the FSCS and alerts us to maturity dates.
It is a vital tool, not just for individuals but also for trustees whose funds have large cash holdings and obligations to the beneficiary to get competitive rates. We often see clients who do not want to tie up all their funds and we can now advise on cash deposits effectively.
* It’s also worth bearing in mind that some deposits are temporarily protected by the Financial Services Compensation Scheme for higher amounts. “Temporary High Balances” following life events such as (but not limited to) property sales, inheritance, redundancy and compensation payments are (since 3 July 2015) protected for six months up to a limit of £1 million (unlimited for personal injury claims). For more information see the FSCS website.
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