With banks going bankrupt our trust in the banking system is being tested. In the UK people have the first £50,000 in their account protected by the government. However, the UK government has reimbursed 100% of deposits in failed banks so far, regardless of how much money an individual had on deposit over £50,000.If the banking system comes under more pressure, and many more banks begin to collapse, then maybe the government will struggle to honour its promise to ensure no tax payer suffers from the credit crunch.
Some might think of doing without a bank but these days it is hard to live without having a bank account. If you are legally employed then your employer will want a bank account into which your salary will be transferred.
Many utility bills are cheaper if paid by direct debit from a bank account so it pays to have a bank account. Telephone and Internet service providers require payment through a bank account as proof of address.
Some people prefer not to have a bank account so that they can avoid being monitored by credit companies or have their details on a database. It is a matter of personal choice. Privacy comes at a price.
If you fear what will happen to your money on deposit then make sure you deposit less than £50,000 in any one bank. That will ensure there are no difficulties in the future, should the government decide not to honour its promise to help everyone out. For joint accounts the compensation limit is £100,000 so a couple might want to take advantage of that.
Make sure that if you deposit money in many banks that each bank is working under a separate banking licence. The £50,000 rule is per banking licence. If you have two accounts, one with the Halifax and one with the Bank of Scotland then that counts as a single banking license as both banks have merged. If the takeover of Halifax Bank of Scotland is completed by Lloyds TSB then you will have to make sure that you only have one account amongst the three institutions.
Take care also with overseas banks. They may have attractive interest rates but not all are covered by the government's promise. Only banks registered in the UK will have its depositors protected by the UK government. Some UK customers had online accounts with collapses Icelandic banks and will be reimbursed. However, customers with accounts in Icelandic banks based in the UK Crown Dependency of Guernsey are not covered.
Look after your money because you are going to need every penny you have. Life is about to get very hard. Trillions of pounds, dollars, euros, you name it will be borrowed to pay for this banking mess. Guess who is going to pay for it all? It won't be the bankers.
BBC - How do you live without a bank account?
5 comments:
That is a very good question. I am lucky (knock on wood so far) that I do business with a local bank. They seem to have a good rating according to BankRate.com.
Nobody in the UK will lose money that they save in a UK Bank. The government will ensure that banks are taken over - or will nationalise them before they go bust. Anything else would be politically unacceptable to them.
Yes, I am certain now that the UK government won't allow any saver to loser money.
Even if it means printing money and hyperinflation.
yeah it will lead to hyperinflation
You said - Many utility bills are cheaper if paid by direct debit from a bank account so it pays to have a bank account. Telephone and Internet service providers require payment through a bank account as proof of address.
My thoughts about it -
May banks in new zealand are ripping us frugal people off, direct debt payments you are opening yourself to let these companies attack your money.
I rather use AP I had problems with direct debts and I'm alway's arguing with the management of a company so I can use AP, it's cheaper using AP in fact you should try putting your bills money into a envolope so you know what needs to be paid. My mother did that for many years while she had 8 of us kids, my mother was sort of a frugal lady of the years.
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