Your money’s not safe in a bank – don’t become a target.
Not long to go now before the security of the money you keep in your bank account is significantly reduced – five weeks in fact. On January 1st 2016 the banks will reduce the amount of money that is “guaranteed” in your account from £85,000 to £75,000. Now whey would anyone do that? Really – why would they do that? I raised the issue with my local NatWest this week and was told that “since the bank was effectively owned by the government ALL my money was completely safe since governments don’t go bust”. What unbelievable stupidity. How inaccurate can one sentence be?
Of course governments go bust – they go bust all the time. In fact, there isn’t a single government in the world that hasn’t defaulted at least once (yes including the British) and most have gone bust more than once.
How much of your money is protected in a bank?
From January 1st only £75,000 of your money in a bank is protected by the Financial Services Compensation Scheme (FSCS) in the event of a bank default. No doubt you will have been listening to their radio advertising over the last few months telling you what a great job they are doing in protecting your money. What they don’t tell you in that massive marketing campaign is that, come the new year, you will be significantly worse off than you are now.
It’s important you know the detail:
- For individuals, the level of cover is reducing from £85,000 to £75,000 PER BANK (or Building Society).
- For Joint Accounts, each account holder will be covered for up to £75,000.
- Watch out for Banks that trade under different names. e.g. NatWest and RBS are effectively the same bank so don’t think you will get £75,000 cover from each – you won’t.
How to protect your self from a bank default.
Whilst the banks intentions may be honourable, the reality is, not a single UK bank has the funds to cope with even a small bank run. Even if they are willing to pay you back, if the money isn’t there they simply can’t do it. Think back to the queues that formed outside Northern Rock only a few years back. Think back to that guy who barricaded himself in the manager’s office because the proceeds of the sale of his house had suddenly disappeared into thin air and no one was willing to pay him back. Now tell me that a bank is safe. We all know that eventually the government bailed Northern Rock out in 2008 (another bank that no longer exists – bought by Virgin in 2012) but please do not hold on to the idea that your bank is safe because the government will step in. Governments around the globe are maxed out with debt right now – and that debt just keeps getting bigger.
To protect yourself this is what you should do:
- Make sure that you never have more than £75,00o in any one bank.
- Check to make sure that if you have different bank accounts they aren’t actually owned by the same company since that would halve your cover.
- Open a new account if necessary to spread your funds.
- Buy a couple of good quality safes and keep enough cash at home to survive at least a month.
- Hold physical gold and silver to protect you from currency collapse.
- Try and reduce your exposure to digital banking as much as you can. It is only a matter of time before you suffer a personal theft of your identity OR the entire system is compromised through mass hacking. Please don’t wait until you become e victim before you do something about it.
The global banking system is an absolute mess right now and security is becoming an increasing problem. Why else would a cap be put on the amount of money that is categorised as protected funds? Someone is doing a damage limitation exercise here.
The bottom line: Take personable responsibility for the cash you and your family currently hold because the current banking system simply cannot be trusted with your money.