Is your money safe? How to make sure your cash is secure

Losing money to fraudsters, because a business goes bust or because you didn’t understand the risk is incredibly frustrating.

Not only can the loss of hard-earned cash can be hard to deal with financially, it can also be quite emotionally draining to realise you’ve lost out – especially if you don’t have a way to claim your money back.

But a typical British consumer actually has a huge range of protections, if they make use of them.

Here’s what you need to know to keep your money safe.

Monitor your money better

Do you know where your money is at any one time? With multiple current accounts, credit cards and savings accounts it can be all too easy to lose track of how much money you’re holding where.

It can also be easy to overlook a credit facility like a card or an overdraft, meaning it can be easy to miss fraudulent use of those accounts.

But there is so much technology these days that helps you monitor all your accounts in one easy place. There are money management tools, there are apps that use new Open Banking regulations to bring together all your data in one secure dashboard.

Some banks even offer this kind of technology, allowing customers to view accounts from other banking providers via one straightforward dashboard. Make sure it’s a secure, regulated provider but then this kind of tech could make a real difference.

Use a credit card

If you make a purchase worth more than £100 and less than £30,000 and you use a credit card rather than a debit card to pay, then you benefit from an extra level of protection.

The credit card provider is jointly responsible for your purchase, so if the company you buy from won’t resolve your issue or if the item is faulty, then you can make a claim via your credit card firm.

Even better, you get this protection for the full value of the item even if you only pay a portion of the full cost with a credit card – as long as that portion is more than £100.

Just be aware that the protection only works if you make a single purchase. If you bought one item for £55 and one for £46 then you don’t get the protection, even though it totals more than £100.

But if you paid £100 of a £2,000 sofa with a credit card, then the card provider would be jointly liable for the full amount with the sofa company.

Check you get FSCS protection

If a bank or building society goes bust then your savings are automatically protected by the Financial Services Compensation Scheme (FSCS) – assuming they are protected by the scheme.

All banks and building societies that are authorised by the Prudential Regulation Authority are protected by the FSCS scheme. That means you have up to £85,000 guaranteed if anything happens to the bank – and that doubles if you have a joint account.

You can also get FSCS protection from mis-selling or for a company going bust that handles your insurance, mortgages, investments or pensions. Always check that your provider is regulated by the Financial Conduct Authority and make sure to check the compensation limits for those products before you buy.

Split your money between banks

The £85,000 FSCS protection is per person, per bank. That means that if you have more than £85,000 saved then you can multiply the protection by saving your money across more than one bank.

So, if you save £85,000 with Bank A and £85,000 with Bank B then you get £170,000 guaranteed. Save another £85,000 into Bank C and that’s guaranteed too.

In that way, you can make sure that all your savings have FSCS protection. Just remember that some banking brands are owned by the same bank license, so they count as one institution when it comes to FSCS protection and compensation.

Make sure you use different banks with no connection to maximise the amount of protection you get.

Hang up on cold callers

A huge number of mis-selling scandals and fraudulent scams begin with a cold call, i.e. a phone call that the person wasn’t expecting and where an experienced salesperson gets them to sign up to a service or switch their savings.

It’s been a real problem for pension savers, with many people being persuaded to use their new pension freedoms to move their nest egg to a less favourable account.

The answer is to ignore cold callers but if that’s hard then you can also minimise the number of calls you get by signing up to the Telephone Preference Service. It’s illegal for firms in the UK and the rest of the EU to call you if you’ve registered with the TPS, unless you have agreed to accept calls by checking a box on a form.

Of course, being on the TPS won’t put off fraudsters who aren’t regulated and don’t really care about breaking another law, so you still need to be on your guard.

Take five

No one is too smart to be scammed. Some fraudsters can be incredibly believable and seem astoundingly genuine. They may also have information about you already that make their calls seem even more legit.

Don’t be complacent about fraudsters. The ‘Take Five’ campaign run by UK Finance recommends people stop and think before taking financial steps that could be a risk. For example, if they are asked to move money or share a password, click on a link or file, or provide personal information then it’s just sensible to take five minutes and investigate whether it’s genuine before responding.

The FCA also has a good Scamsmart website, to help you spot a scam from a smart investment.

Check your rates and switch

It’s not just fraudsters and failing firms you need to protect your cash from. Many of us lose money drip by drip because we don’t switch to savings accounts that pay enough to beat inflation or because we stick with insurers and energy providers long after the competitive introductory deal ends.

Setting aside even an hour a month to review your finances and move to better deals and rates can help keep your cash safe from the cost of apathy. There could be hundreds of pounds a year at stake.

Split your money into long and short savings

Interest rates on savings can be painfully low at the moment, thanks to a low Bank of England base rate.

So, there’s a risk that inflation is higher than the interest you earn, devaluing your cash while it sits in the bank. One solution to that is to put some of your money into a long-term savings account like a fixed rate bond.

These more restrictive accounts often pay higher rates of interest so your returns are greater.

It’s sensible to keep some cash in an easy access account too though, so that you have money you can withdraw fast in an emergency.

Don’t worry, you get FSCS protection on both kinds of savings.

For more information on FSCS and the different financial products they help protect, you can visit their website at www.fscs.org.uk