Safe Savings

In the wake of the economic crisis the hunt for the best savings accounts has become more difficult. Many high street banks have reduced the interest rate on the accounts they offer in line with the lowering of the Bank of England's base rate, leading many experts to suggest that the best place to have your money is in internet bank accounts.

This is all very well, the internet can offer extremely good deals, partially because they don't have to deal with the administration costs associated with having a high street branch. These savings are apparently passed onto the customer.

But do you really know where your money has gone with some of these accounts? The answer is, often, yes, it's in an internet only account with a reputable banking name like Alliance and Leicester, but if you've never heard of the bank before you should think twice before putting your money there.

The reason for this is that a bank registered in the UK is underwritten by the government to the tune of £50,000 per person. This means if the bank happens to go under, then anyone with less than £50,000 saved will receive all of their savings back, anyone with over this amount will receive £50,000 but no more.

The same conditions do not apply with banks registered in Europe, which is why when the Icelandic banks first collapsed there were fears that people would not get any of their money back. That is not to say that you should not invest in a bank registered in Europe, nor that any European bank is liable to collapse but you should do your research first.

Any scheme in the EU will offer protection for at least the first 20,000 euros and many potentially more. The only way to know for sure is to research the bank, find out where it is registered and investigate the legislation for protecting bank accounts in that particular country.

Finding the best place to put your savings is important, but it's also equally important that you don't put yourself at risk. If you find a fantastic deal, consider it carefully before going ahead, look at reviews on the internet from other customers and financial groups such as the FT just to make sure that your money is going to be completely safe. If you have any doubts then you can't really go wrong with an established, UK registered bank. Alliance & Leicester are always worth a look and tend to offer competitive rates. Give their website a look for their full range of savings accounts.