The six safest places for your savings

Bradford & Bingley, HBOS, Northern Rock, Alliance & Leicester, and the Cheshire and Derbyshire building societies have all fallen victim to the credit crunch. Amid all the turmoil, savers are becoming increasingly concerned about the safety of their deposits. Here are Times Money's six safest places to store your cash.

1. Northern Rock

Since the nationalisation of Northern Rock in February, the Government now guarantees all deposits – even if they exceed £35,000. As the Rock has been desperate for cash to shore up its balance sheets, it started to offer more competitive savings rates recently, meaning savers have been benefiting from some great deals that are 100 per cent guaranteed.

More than £1 billion of savings has flooded into Northern Rock in the past two weeks, following the continuing chaos that has engulfed the banking sector.

However, savers wishing to take advantage of the Rock’s rates should act fast. Under European competition laws, Northern Rock can not hold more than £17.6 billion in customer deposits - equivalent to 1.5 per cent of all savings held in British institutions. It is thought the bank was just £1.5 billion short of this cap on Friday, before concerns about Bradford & Bingley had emerged. If the flow of savings continues at the present rate, the bank may only have a week or two left to take deposits.

2. Spread amongst all the banks

If you have a large amount of savings, one of the safest things you can do is spread the cash about different accounts in chunks of £35,000. If a bank did go bust, the Financial Services Compensation Scheme (FSCS) would guarantee the first £35,000 of your deposits with each financial institution.

Bear in mind that if you have savings products with different brands owned by the same company, the £35,000 limit applies only once. Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance, for example, are all part of the same group and are registered with the FSA under the name of Bank of Scotland.

Savers with Alliance & Leicester and Abbey do not need to worry about the implications for their deposits after the Santander takeover of A&L, since A&L is becoming a subsidiary of Santander, which means it is retaining its

separate banking license. Deposits of up to £35,000 with A&L and £35,000 with Abbey remain protected. This is not the case for savers with Bradford & Bingley, which is also being partly bought out by Santander, since B&B is not retaining its own license.

The good news for savers looking to spread their savings is that banks are still desperate for deposits and there are some great rates available.

3. National Savings & Investments (NS&I)

NS&I has always had a 100 per cent guarantee on all deposits, because it is backed by the Treasury. Although it does not usually offer best-buy rates, it has seen a marked increase in savers deposits this year. A spokesman said: "Our sales in 2007/8 were higher than expected - we achieved an additional £3 billion on top of our original

forecast."

NS&I’s Direct Isa is currently at 5.3 per cent – better than some high street deals, but not the most competitive – whilst its easy access savings account pays up to 4.4 per cent. The annual rate used to calculate the prize on premium bonds draws is just 3.4 per cent. Mr Mountford said: “What attracts savers to NS&I is the peace of mind – not necessarily the best interest rates.”

4. Safety deposit box

One in ten people think their money would be safest under the mattress, according to a survey earlier this year by Newcastle Building Society. However, experts say that keeping your money at home is the worst thing to do in this situation. “Not only would inflation soon erode the value of the cash, but it can be dangerous as well,” said Mr. Mountford. “Most home insurance policies will only cover a minimal amount of cash, so if the money was stolen or destroyed, there may be little hope of redress.”

If you really do not want to keep your money in a bank or building society, a safety deposit box may be an option. However, there may be a long waiting list for a high street bank’s box and there will always be a fee to use it.

5. Your debt

One of the safest things you can do with your savings is pay off part or all of your debt. Melanie Bien at Savills, the broker, said: “Clearing debt is a very good idea at the moment – as long as people do not use money they may need at a later date. Almost all lenders will allow you to overpay by up to 10 per cent of your mortgage balance per year without incurring any penalities – Nationwide allows you to overpay by £500 per month. Overpaying by even a small amount can significantly reduce the interest you pay and allow you to clear the

mortgage more quickly.”

The Student Loans Company allows you to pay off some or all of your student loan at any time – just call its helpline on 0870 240 6298 to ask for a final balance. If your credit card is still on 0 per cent interest, then remember you may as well take advantage of that for as long as possible, until your provider starts charging interest. With personal loans, providers will probably charge you an early settlement fee – usually of one month’s interest – if you choose to repay the loan early, so think carefully about that. Make sure that fee does not

amount to more than the interest you would pay if the loan ran its course.

6. Ireland

Yesterday Ireland's Government said it will guarantee all bank deposits - up to no limit - at its six main banks for the next two years. The unprecedented action, which starts immediately, was done in an effort to maintain financial stability after Irish banks' shares collapsed on Monday.

Luckily for savers over here, there are several Irish banks that operate in the UK and will offer savers this 100 per cent protection – Allied Irish Bank, Anglo Irish Bank and Bank of Ireland. And savers with Post Office accounts, which are provided by the Bank of Ireland, will now automatically benefit from the increased level of protection.

Anglo Irish offers several competitive deals, including 7.05 per cent on its one-year fixed rate bond and 6.4 per cent on its easy access account. The Post Office’s cash Isa pays a respectable 6.25 per cent, dropping to 5 per cent after a year.

By Lauren Thompson

Fighting the scourge of scareware

By Maggie Shiels
Technology reporter, BBC News, Silicon Valley
Full article at BBC.COM


Microsoft and Washington State's Attorney General filed lawsuits against scam artists who frighten consumers into buying useless software.

"Scareware" merchants are accused of tricking computer users into clicking on pop-up alerts that claim their device is "damaged and corrupted".

They are then persuaded to buy software that corrects the non-existent issue by offering fake security fixes.

It is a "blatant rip-off of consumers," said Attorney General Rob McKenna.

Users are "duped into downloading a fake scan (of the computer) and then duped into paying for software they don't need".

The attorney general's lawsuit has been filed against a Texas firm called Branch Software and Alpha Red and its owner James Reed McCreary IV. The suit alleged that Mr McCreary's company "sent incessant pop-ups resembling system warnings to consumers' personal computers.

"The messages read "CRITICAL ERROR MESSAGE! - REGISTRY DAMAGED AND CORRUPTED."

The complaint goes on to claim that the ads "instructed users to visit a web site to download Registry Cleaner XP" at a cost of $39.95 (£21.70)

"We won't tolerate the use of alarmist warnings or deceptive 'free scans' to trick consumers into buying software to fix a problem that doesn't even exist," said Mr McKenna.
"We've repeatedly proven that internet companies that prey on consumers' anxieties are within our reach."

The problem is a growing one according to Eric Sites, the chief technology officer with security firm Sunbelt Software which tracks spyware and malware threats.

"In the last six months we have seen an enormous uptick in the number of people getting infected by these scareware or spyware agents.

"They are becoming a lot more prevalent and the 'scare and scam' is all about getting money out of the user," he told BBC News.

"Online threats"
The organisers behind the scheme took advantage of a Windows operating system feature designed to let computer network administrators send notices to people using the machines.

Microsoft referred the case to the attorney general's high tech unit and helped put the case together.

"Cybercrime continues to evolve, but with public/private collaboration such as this, we can work to champion tougher laws, greater public awareness and, ultimately, stronger protections for online consumers," said Richard Boscovich, senior attorney for Microsoft's internet safety enforcement team.

Meanwhile the software giant has filed five new lawsuits and amended two previous complaints all relating to spyware attempts.

The programmes listed include Scan & Repair, Antivirus 2009, MalwareCore, WinDefender, XPDefender and WinSpywareProtect.

Most of the defendants are listed as "John Doe" because investigators do not yet know the identities of the people involved.

Catching those behind these spyware scams and bringing them to justice might not be so simple explained Mr Sites.

"These people could be in Russia or some other country or using fake names. It is sometimes impossible to find out who is behind these scams. But if there is a money trail, that usually helps."

Microsoft estimates that half of the computer crashes reported by callers to its customer support lines can be blamed on spyware messing up machines.

A recent report from North Carolina State University showed that most internet users are unable to tell the difference between genuine and fake pop-up messages.

"This study demonstrates how easy it is to fool people on the web," said co-author Dr Michael S Wogalter, professor of psychology.

Despite being told some of the messages were fake, people hit the OK button 63% of the time.