7 ways to look after your cash


ASPL's guide to protecting, managing and making the most of your cash.

1. Save in a UK bank and you’re covered for up to £85,000

Your money is safer in UK registered Savings Accounts or Cash ISAs than under the mattress at home. If the bank collapses, the Government promises to pay out up to £85,000 per person per financial institution, but beware where different banks form part of the same group as you’ll only get one lot of £85,000 protection.

2. Did you open Savings Accounts over 1 year ago?

Beware. Check your current interest rate. It is likely to be paltry, often less than 1%, so “ditch and switch”.

3. Literally – don’t stash cash under the mattress – it’s only covered for £750

Hopefully none of our clients do stash cash under the mattress, but if they do, not only is it foregoing interest, but most home insurance policies cover up to £750 in cash (and usually require proof via a receipt or bank statement).

4. Paying by plastic is safer

Buy goods for £100 - £30,000 on a credit card and legally the card firm is jointly liable so you can claim a refund from it. We understand that even if you just pay one penny on a card for, say, a £5,000 kitchen the card issuer is still liable for the whole amount. As credit card debt is typically the most expensive form of borrowing, it’s obviously best to pay down this debt before anything else.

5. How to save large amounts in 100% safety

Spread £85,000 chunks in a number of top Savings Accounts at different institutions. It’s also worth looking at National Savings (NS&I) for other 100% Government backed investing, but noting that the rates offered are increasingly uncompetitive, if available at all. NS&I products come and go.

6. Don’t keep all your cash in current accounts

I’m sure this message has got through to all our clients, but current accounts are there for convenience and not for a good rate of interest. If you’ve got more than you need as an emergency reserve in your current account, then switch it to a higher interest savings account instead.

7. Don’t waste your ISA allowances on Cash ISAs!

From time to time we come across clients who have taken out a Cash ISA. Just to remind
everyone, if you only invest in Cash ISAs you are only able to save half of the amount you could save via Stocks & Shares ISAs (currently £11,280 for 2012/13). As ISAs still seem to be the “best” method of avoiding political interference, we urge everybody to maximise their ISA allowances whenever possible.

Source: MSE 2012 

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Adrian Smith

Chartered Financial Planner
Chartered Wealth Manager

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