Did you know that the compensation limit for UK savings accounts changed on 1st January?

If not, you are not alone.  Recent research has found that only around half of UK consumers knew that the limit changed on 1st January, 2011 to provide increased protection for the holders of the top savings accounts.

Banking compensation limit rose on 1st January

Before 2011, the Financial Services Compensation Scheme (FSCS) offered UK consumers protection for the first £50,000 of their savings (£100,000 for joint accounts) in the event of a bank collapse.  However, in line with other European countries, the limit was raised on 1st January 2011 to €100,000 (around £85,000).  The limit is doubled for joint accounts.

This amount will be fixed for the next five years.

UK consumers unaware of change

Even though the limit has only recently been raised, a recent poll found that less than half of UK consumers were aware of the change.  52.2% of those surveyed knew the current compensation limit but were unaware of the change.

We at compareandsave.com welcome the decision to raise the level of compensation payable under the Financial Service Compensation Scheme.  We believe that this will give additional confidence to savers who, thanks to low interest rates and concerns over the stability of financial institutions, have had a rough time over recent years.

Make sure you protect your cash

To maximise your protection, when you compare savings accounts to find the top savings accounts, you should make sure that you spread your cash between banks.

While the compensation limit was raised in January in line with EU legislation, you should remember that the limit is ‘per institution’.  With many takeovers and mergers having taken place in the last few years, it is vital that you make sure you maximise your protection by picking the best savings accounts from different providers.  For example, Santander now incorporates Abbey, Alliance and Leicester and Bradford and Bingley; all popular places that savers have previously invested their cash.

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Here are 5 tips for making the most of 0% balance transfer credit cards:

1. The MBNA selection of credit cards usually have an upfront fee for 0% balance transfers, but they offer these deals to existing customers as well as new customers (who are the primary targets for most 0% balance transfer credit cards). Check out the Virgin, Alliance & Leicester, and MBNA cards for 0% transfer deals.

2. Balance transfer offers generally start on the date the card account is opened, so if you don’t transfer your balance immediately, you’re wasting valuable time at the 0% rate. Plus, some companies say that you have to transfer any balances within 60 days of account opening. If you can, choose a card where you can submit balance transfer details right with the application.

3. It bears repeating: shop around. Compare 0% offers on credit card rather than simply taking up your bank on their offer of a low rate card.

4. Find out if the card you’re considering has a lifetime low interest rate on the transferred balance or whether it is short term and choose according to how quickly you can pay off the balance.

5. New spending on 0% balance transfer credit cards is charged at the typical APR (unless the card offers 0% on purchases too). Furthermore, this debt can’t be repaid until you’ve paid off the balance you transferred (this will change in January 2011 when new credit card legislation comes into effect which says that credit card issuers must put repayments towards the most expensive, rather than the least expensive, debt first). Therefore, interest accrues wildly with new spending. You might be better off getting a separate 0% purchase card for new spending and only using the 0% balance transfer card for paying off the transferred balance.

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By the end of January 2010 Spanish bank Santander should complete its re-branding of all 1,000 Abbey and Bradford & Bingley branches. Santander will then move to re-brand all 278 branches of Alliance & Leicester later in the year.

The end result will see Santander become the fifth-largest bank in the UK with 1,300 outlets.

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