KNOW YOUR LIMITS TO KEEP CASH SAFE

YOU should never hold more than £85,000 in a single bank or building society.

If you have more than this, you need to spread the cash across a number of different institutions. Under the Financial Services Compensation Scheme (FSCS), up to £85,000 is safe at any one firm in the event that it goes bust.

On joint accounts, you get £170,000 of protection.

The FSCS compensation limit covers banks, building societies and credit unions.

However, you should beware of holding more than £85,000 with banks that are linked to one another.

Halifax and Bank of Scotland, for example, share the same banking licence. As do HSBC and First Direct.

That means you get only one lot of protection on your two pots of cash.

In practice, it means you would be fully covered if you split £100,000 so that £50,000 was in a Barclays account, for example, and £50,000 in a Lloyds account.

But only the first £85,000 is safe if you put £50,000 with Bank of Scotland and £50,000 with Halifax.

Until January this year, the savings safety net limit was just £75,000 (and £150,000 on joint accounts).

This year, the Bank of England increased it to reflect the fall in value of the pound against the euro.

This is because the EU ruled that every nation should have the same limit, which it set at €100,000.

Back in 2010, this was equivalent to roughly £75,000. But since the UK’s Brexit vote last June, the pound has fallen in value against the euro.

The exchange rate was then reviewed and a new £85,000 limit was set.

This new limit means 95 pc of savers are fully protected for all their deposits.