Deposit accounts

Money deposited in a bank or building society etc. Generally considered very safe (although banks and building societies can default - see below for protection rules), with interest earned being taxable, depending upon personal circumstances. May be instant access or require notice.

However, unless your net interest is GREATER than inflation, any money on deposit is slowly losing value. For this reason it is generally unwise to have large sums on deposit, unless they are set aside for a purpose - house deposit, care fees etc.

As a rule of thumb it's good to have several months' income requirements available on deposit, as an emergency or floating fund. If you have more than a year's income in deposit accounts, however, then you may be missing out on more appropriate opportunities.

Deposits are protected for the first £85,000 per account holder and £170,000 for joint accounts per regulated institution*.

The way in which this protection operates can be complex and subject to change. If your total deposit funds across all your accounts exceed these limits, you should talk to your financial adviser.

*When the organisation is UK authorised and regulated. We can check that your money is with such properly regulated organisations. Be aware that if you are dealing with any kind of offshore jurisdiction - including the Isle of Man and the Channel Islands - you might be beyond the jurisdiction of the UK system. Other countries within the EU are obliged to operate deposit protection schemes, although the financial limits and claim criteria may vary from country to country.