The Post Office has a selection of savings accounts, which are provided and run by the Bank of Ireland. In the last few weeks, many of the Post Office's 500,000 savings customers, will have received letters advising them that they are no longer covered under the UK's Financial Services Compensation Scheme (FSCS) but instead are covered under the Irish Deposit Guarantee Scheme (IDGS). Customers of Anglo Irish Bank, the recently nationalised bank, have also found themselves in a similar situation.
The Post Office and Anglo Irish Bank were never fully fledged members of the FSCS. Until recently if an Irish Bank failed, savers would claim compensation under the Irish Scheme and then would be topped up by the FSCS to receive the same level as UK savers. In September 2008, the IDGS increased its cover to €100,000 per person per deposit taking institution. By comparison, UK customers are covered up to £50,000 per person per deposit taking institution.
As the IDGS level of cover is now more than the FSCS scheme, there is no need for savers, money to be topped up if a bank failed, so they no longer need to be linked with the FSCS. Any money in six Irish banks, including Anglo Irish Bank and Bank of Ireland, is currently 100% covered by the Irish Government, but this expires in September 2010, after which it will be covered up to the current €100,000 limit.
Despite the fact that savers covered under the Irish scheme receive a higher level of compensation if one of their banks failed, many savers are unhappy about no longer being covered under the UK scheme and want to move their money away. The search for a perceived safe haven has become fundamental for savers looking for a new account, but they do not want to relinquish getting the highest rate of return for their money.
With numerous cuts in base rate, half of accounts on the market now pay a rate of 1% or less, therefore it is imperative that you shop around for a good deal. Rates of over 3.5% can still be found on a number of accounts. Sites such as Moneyfacts.co.uk, allow you to input your personal circumstances and find the best account for your needs. That way you can make the most of your money at this difficult time.
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