The new year has brought some good news for savers, as the amount of compensation banks offer against deposits has increased.
Savers can now enjoy cover of up to £85,000 (£170,000 for joint savings accounts) on funds held within a single banking institution, after the Financial Services Compensation Scheme (FSCS) announced the £35,000 increase.
The protection limit is offered per institution rather than per person, so if money is spread between several institutions savers can effectively increase the amount of protection they have on savings.
For example, if you put £85,000 into a NatWest savings account, then opened a separate account with Santander and deposited the same amount, you will benefit from full protection.
Find out more through our guide: Secure Savings and Compensation.
An FSCS spokeswoman said the heightened protection was due to new European legislation which matched the compensation limit to the current eurozone rate of €100,000 for savings accounts held with a UK authorised bank, building society or credit union that fails.
“The increased limit has resulted from the Deposit Guarantee Scheme Directive,” she said.
“Having one limit across Europe makes it easier for consumers to understand how much protection they are entitled to.”
The extension has been long overdue, after originally being set up in 1994 to provide EU savers with a safety net in case a bank failed.