What is the maximum amount to keep in a bank account?

Is There a Maximum Amount You Should Keep in a Bank Account?

While you can technically deposit as much as you like into a standard bank account, the question of how much you should keep boils down to balancing accessibility, returns, and, crucially, protection. There isn’t a legally imposed maximum deposit limit, but understanding the nuances of deposit protection schemes should inform your decision.

In the UK, the Financial Services Compensation Scheme (FSCS) safeguards your savings up to £85,000 per person, per authorized institution. This means if your bank fails, the FSCS will reimburse you up to this amount. This protection isn’t for each account you hold with a bank, but rather for the total sum of your deposits with that specific institution. Therefore, holding multiple accounts within the same bank won’t increase your FSCS protection.

For joint accounts, the protection doubles to £170,000. This is per joint account, not per individual. So, a joint account held by two people is protected up to £170,000 total, not £170,000 each.

Knowing this, strategically distributing your savings across different authorized institutions can maximize your FSCS protection. If your savings exceed £85,000, consider spreading them across multiple banks to ensure full coverage.

However, FSCS protection is just one piece of the puzzle. While ensuring your money is safe is paramount, also consider the potential returns on your savings. Standard savings accounts often offer relatively low interest rates, particularly when inflation is considered. For larger sums, exploring alternative investment options like bonds, stocks, or managed funds could offer better returns, albeit with varying levels of risk.

Furthermore, tying up significant sums in easily accessible accounts might not be the most efficient financial strategy. While liquidity is essential, consider your short-term and long-term financial goals. Money earmarked for specific future expenses, like a house deposit, could benefit from being held in a dedicated savings account or investment vehicle tailored to that purpose.

Ultimately, the “maximum” amount to keep in a bank account is a personal decision based on your individual circumstances, risk tolerance, and financial goals. Understanding the FSCS limits provides a vital benchmark for safeguarding your savings, while considering alternative investment options and your overall financial plan can help you make the most of your money.