Under the Financial Services Compensation Scheme, savings up to £35,000 are protected against loss. The scheme is the UK’s statutory fund of last resort for customers of regulated financial organisations such as banks, building societies, cash ISAs and Toisa (Tessa only ISA).

In July Chancellor Alistair Darling announced that all savings up to £50,000 will be covered by the end of the year.This figure represents a rise of £15,000 from the previous level.

The new rule will apply as long as your savings are not all held with the same savings institution. The limit on joint accounts will also rise - to £100,000.

SAVING TO SUIT YOU

Information from myfinances.co.uk outlines the many options available to customers looking to find the safest place for their cash.

Savings Accounts
Savings accounts are accounts held by banks or building societies into which people can deposit money and receive interest payments.

Rates of interest paid can vary widely between providers.

The highest rates of interest paid on savings accounts typically come with heavy restrictions on how money is paid in and when it can be accessed.

Some accounts allow instant access to savings and unlimited withdrawals, others impose penalty fees unless savers give appropriate notice to providers of the intention to withdraw money, or impose limits on the number of penalty-free withdrawals allowed each year.

Other accounts offer high rates of interest based on the regular nature of contributions - typically between £10 and £250 a month - with access to the money after a year (regular saver accounts).

Savings Bonds
Savings bonds are a type of savings account where money is put away for a set period.

Typically, these offer a high rate of interest, but collecting this interest is dependant on the money invested remaining in place for a set period of time (typically one or two years).

People investing in a savings bond can generally access the money they have placed in a savings bond before the completion date, but choosing to do so might mean that less money is returned than was invested or that the amount of interest received is lower than would otherwise be the case.

Savings bonds are typically issued in blocks, with a provider offering access to fixed-rate or guaranteed return savings for a limited time only.

Individual Savings Accounts (ISA)
ISA investments are investments in stocks and shares or cash savings that are sheltered from tax in an individual savings account (ISA).

ISAs give you the chance to save up to £7,200 a year without paying tax.

Accounts are divided into stocks and shares ISAs, where up to £7,200 can be invested, and cash ISAs where £3,600 can be saved.

The total ISA allowance for a tax year is £7,200, so if you have £3,600 in a cash ISA, only £3,600 can be saved in a stocks and shares ISA, or if £1,000 is in a cash ISA then £6,200 can be in a stocks and shares ISA.

Around 17 million people now have £287 billion in ISAs.