Is my money safe if my bank goes bust?

Up to £120,000 per person, per banking licence, is protected by the FSCS if a UK bank, building society or credit union fails. Most people get their money back within days. Some banks run several brands on one licence, so the limit covers all of them together.

Do I pay tax on savings interest?

Usually not. The Personal Savings Allowance makes the first £1,000 of interest a year tax-free for basic-rate taxpayers and £500 for higher-rate taxpayers. Interest in a Cash ISA is always tax-free. Banks pay interest without taking tax off, so HMRC collects any tax through your tax code or Self Assessment.

How long does it take to switch bank account?

Seven working days with the Current Account Switch Service. It moves your balance, Direct Debits and standing orders, closes the old account and redirects payments sent to it, so you don’t have to tell everyone your new details.

Can I get a bank account with a bad credit history?

Yes. The biggest banks must offer a basic bank account with no monthly fee to people who don’t have another account. It comes with a debit card, Direct Debits and standing orders, but no overdraft, so you can’t go overdrawn by mistake.

What is the difference between AER and gross rate?

The gross rate is the interest before tax, paid at the account’s usual interval. AER (the Annual Equivalent Rate) shows what you’d earn over a year with interest added to interest, so it’s the figure to compare between accounts.

Banking basics in the UK: current accounts, savings and FSCS

Current account vs savings

	Current account	Savings account
What it’s for	Bills, your debit card, your salary	Money you’re not spending yet
Interest	Usually little or none	Some: compare the AER
Getting at it	Any time	Easy access, notice or fixed term

Have your pay go into your current account, then set up a standing order to savings for the day after payday. Saving first, before you spend, is the easiest way to make it happen.

What to look for

No monthly fee, unless the perks are worth it to you.
A low overdraft rate if you might need one, or none at all.
A good savings rate (AER). Easy-access accounts let you take money out any time; notice and fixed-rate accounts pay more for locking it away.
Switching is easy: the Current Account Switch Service moves your payments to a new bank in seven working days, and some banks pay you to switch.

If you’ve been turned down for an account, ask for a basic bank account. The big banks offer them with no monthly fee and no overdraft, whatever your credit history.

Tax on savings

Most people pay no tax on savings interest: the Personal Savings Allowance lets basic-rate taxpayers earn £1,000 a year tax-free and higher-rate taxpayers £500. If your other income is low, up to £5,000 more can be tax-free under the starting rate for savings.

A Cash ISA keeps interest tax-free whatever you earn. You can put up to £20,000 a tax year into ISAs, all of it in a Cash ISA if you like: Budget 2026 dropped the planned £12,000 Cash ISA limit. The savings interest calculator shows the interest and any tax on yours.

Is my money safe?

The Financial Services Compensation Scheme (FSCS) protects up to £120,000 per person, per banking licence if a UK bank, building society or credit union fails. Joint accounts are covered up to £120,000 for each person.

£150,000 of savings: what the FSCS covers Up to £120,000 per person, per banking licence, if a bank fails

All with one bank or with brands that share one licence: £120,000 protected , £30,000 not protected
Split between two banks with separate licences: £150,000 protected : all of it

Check the FSCS website to see which brands share a banking licence. A joint account is covered up to the limit for each of you.

Some banks share one licence across several brands, so check before spreading savings across them. The FSCS website shows which brands share a licence. Investments and crypto aren’t protected in the same way.

Overdrafts

An arranged overdraft lets you go below zero, but it usually costs around 40% a year, about the same as many credit cards. Unarranged overdrafts can’t cost more than arranged ones. To avoid them:

Keep a small buffer in your current account.
Turn on balance alerts in your banking app.
If you’re in your overdraft all the time, treat it as debt to pay off. See how to pay off debt.

Keep your account safe

Your bank will never ask you to move money to a “safe account” or to read out a one-time passcode. If a call or text worries you, hang up and ring 159 to reach your bank. See how to spot money scams.

What next

Work out where your money goes with a budget, then start an emergency fund in an easy-access savings account.