How safe is money in the bank?

Question

I live in the UK and through inheritance I have acquired a large amount of money (over 200K).

I will be soon investing this money in property. But while all the conveyancing process is going on it will have to stay in my current account. I am worried about how safe this is. I'm specifically worried about cybercrime. I do hear in the media that the threat of cybercrime in a bank is particularly high. A situation could occur where I cannot access my funds electronically.

Is storing this money in the bank my only option? I will have to release it to my solicitor once the property purchase completes, but this could be months away.

Cybercrime is NOT, despite what movies and fiction tells you, the act of hackers "breaking in" digital systems and taking your money. Insurance covers this, and so does legal liability. You carry no risk. Real cybercrime are scams, and you legally authorize* the deduction of the funds and are fully liable for your actions. — Nelson, Jul 15 '22 at 08:53
The media calls it "cybercrime" because it's a lot more palatable than "You idiots keep falling for scams and authorizing transfers." — MonkeyZeus, Jul 15 '22 at 14:01
I asked this same question a couple of months ago and was basically rebuked. My theory is (coming from an IT / security heavy background) is that large scale theft targeting many customers will occur sometime, but at any given point in time the risk is very low if you watch your back. — Ken - Enough about Monica, Jul 15 '22 at 14:28
For future posts, I would suggest that it wasn't you, but a friend of yours, who inherited the money. And when you ask in your friend's behalf, perhaps do so from a brand new SE account. That will actually help you (a bit) protect against scammers. — GuilleOjeda, Jul 15 '22 at 22:18
@Blueriver so we actually believe people that says "asking for a friend"? — Nelson, Jul 16 '22 at 03:29
In the United States I've read about scams where someone was purchasing a house, and a hacker was able to capture that from a hacked email, and the "Escrow Company" (the hacker) sent an email to the person buying the house, saying, oh, we've changed the escrow company, it's now fradulant.example.com/scam .... and the buyer took the bait. The buyer was able to recover some of the lost money, but not a lot... — Mark Stewart, Jul 16 '22 at 22:53
Cybercrime is a huge problem unless you ignore it and leave your funds alone.
Leave your funds alone and there is less than the teeniest chance they might be hurt, as Simon B, et al suggest.

That aside, can you say how "A situation could occur where I cannot access my funds electronically"? That could occur but why might it matter?

Your funds are safely waiting to be transferred for a specific purpose and - in any jurisdiction like my UK - guaranteed by the bank.

Where's the problem unless you mess, or let someone else mess with them? — Robbie Goodwin, Jul 17 '22 at 01:42
Language question about the title: isn't "money" always plural? Shouldn't the title say "How safe ARE money"? — fraxinus, Jul 17 '22 at 08:10
@fraxinus: no, money is almost always singular. (I can not think of a case where it is plural, but I'm playing it safe here.) — user132647, Jul 17 '22 at 11:45
remember that the security of banks depends entirely upon the level of class consciousness in a given society. keep your ear to the ground for revolutions; most workers who earn their money wouldn't take too kindly to £200k worth of nepotism ;) — iono, Jul 17 '22 at 11:50
@user132647 you're right: money is a mass noun, which means that you don't use "a" and generally lacks a plural form. As it happens, there is a plural form of money: "monies", but it has a specific use that doesn't apply here. — Dancrumb, Jul 17 '22 at 19:37

score 89 · Answer 1 · answered Jul 14 '22 at 21:36

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I do hear in the media that the threat of cybercrime in a bank is particularly high.

The media says all sorts of things. The biggest risk is you. For those few months, don't believe anyone calling you and saying that they are from your bank. Don't believe anyone who says you need to transfer your funds out. If you get an email from your solicitor telling you to use a different account for funds transfer, don't believe it - contact the solicitor by another means to check.

A situation could occur where I cannot access my funds electronically.

If you're worried about hacking, then that's a good thing!

answered Jul 14 '22 at 21:36

Simon B

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+1. Most "hacks" are actually social engineering attacks. – littleadv Jul 14 '22 at 21:38
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Plus real hacks are covered by insurance. If someone really hacked into a bank and "took" all the money, insurance steps in, liability laws step in. The bank's customer doesn't take the hit. Even criminal activities like embezzlement and fraud are covered by insurance, so "hacks" that hurts the customer are ones where the customers legally authorized the fund withdrawal. – Nelson Jul 15 '22 at 08:55
@littleadv: I would even say that the hacks targeted toward everyday users are all based on phishing. As an information security professional, I cannot readily think about an attack that would not be one. The attacks on infrastructure will be handled by the ISP, the rare ones on end-user devices, when they are actually feasible, should be fixed with automatic patching. The rest (cameras, ...) - a normal user has zero chance to fix them. – WoJ Jul 15 '22 at 14:37
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Fix "for those few months" to "forever". – user3067860 Jul 15 '22 at 18:26
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In general, only trust contacts for financial transactions in which you initiate contact. For larger transactions going to your bank in person is always worth it. Never complete a large transaction over the phone or email. – TCooper Jul 15 '22 at 20:06
There are, actually, other threats than direct attacks at the bank and social engineering attacks. For example, a MITM attack performed by accessing a public router. So, one additional recommendation: Don't log in to your bank from public networks. If you need to log in on the go, at least use your phone's hotspot. – GuilleOjeda Jul 15 '22 at 22:25
@user3067860 agreed, this post emphasizes the mindset that will keep you from falling victim to a large majority of unsophisticated scams. Everyone should adopt this mindset, all the time. No legitimate bank, law enforcement, IRS, prospective employer, etc... will ever tell you to transfer funds from your bank account or ask for any type of sensitive information out of the blue. – Z4-tier Jul 17 '22 at 15:32
@Nelson : this is why scammers use "mules". If they "hack" into someone's account (or, more commonly, get the victim's passwords via social engineering), and steal the money, after the victim reports the theft, the unauthorized transaction will be reversed sooner or later. This is why the hackers and scammers don't transfer the stolen money into their own accounts, they use gullible "work from home" mules to receive the transfers into their own personal accounts which they then have to forward via other means. The reversal then hits the mule, up to and including them going into the negative. – vsz Jul 18 '22 at 06:16

score 42 · Answer 2 · answered Jul 15 '22 at 06:21

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Not addressing cybercrime, but thinking of other "safety" issues.

Your money is safe in just your current account for a period of 6 months, as a Temporary High Balance.

However, after those 6 months you should be aware that only the first £85,000 (for an individual account) or £170,000 (for a joint account) would be covered under the fscs cover scheme.

The risk of a bank failing is quite small but since the amount you've specified is higher than that amount, then you might want to consider splitting the money into separate accounts at different banks.

answered Jul 15 '22 at 06:21

Damien_The_Unbeliever

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The risk of a bank failing is quite small.

Call me a conspiracy theorist but that was said before 09/08 as well. While I agree that the failure of one specific bank might be small, I wouldn't count it out
– SirHawrk Jul 15 '22 at 08:49
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@SirHawrk: How many UK banks failed in 09/08? Even then the risk of any particular person experiencing bank failure was very low. – Jack Aidley Jul 15 '22 at 10:30
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From 2008-2012 in the US alone there were 465. From 2003-2007 there were 10.
Edit: My bad I misread UK for US. According to this; https://www.fscs.org.uk/news/fscs-news/book-closed-on-2008-banking-crisis/ 4 million bank accounts in the UK were caught in the 08 debacle
– SirHawrk Jul 15 '22 at 11:06
"The risk of a bank failing is quite small". Two words: Northern Rock. (Or "Northern Wreck" as one news reporter accidentally called it live on air.) It's rare, but it does happen. – Pharap Jul 15 '22 at 13:44
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@Pharap - Northern Rock was what made me aware of these sort of issues (thankfully not personally); However, some people may just have seen the headlines which is why I chose to write an answer about the cover scheme here. – Damien_The_Unbeliever Jul 15 '22 at 13:58
@JackAidley AIUI during the 2008 financil crisis the government in the UK had not properly planned out how large scale bank failure would be handled, so they ended up bailing out a bunch of banks and customers with large deposits avoided the haircut they would have taken if the banks had been allowed to fail. – Peter Green Jul 15 '22 at 14:49
Since then a mechanism called "bail-in" has been introduced, I'm not sure on the details, but my understanding is that those with deposits too large for government protection will lose a proportion of their deposits in exchange for shares in the bank, but the day to day operations of the bank will continue uninterrupted. – Peter Green Jul 15 '22 at 14:59
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@SirHawrk and how many people lost all their money when these banks failed? Or did the FDIC step in and transfer all accounts to another bank? – RonJohn Jul 15 '22 at 16:42
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An important thing to understand is that the "bank" covered by the FSCS is not a single brand but a single institution, so when splitting your money you need to pay attention to who operates the account. MoneySavingExpert explains this distinction well, and always lists the covered institution on their Best Buy pages. – IMSoP Jul 15 '22 at 17:08
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@SirHawrk 2008 has actually proven that some banks are "too big to fail" and the government would just print cash to save them if necessary – JonathanReez Jul 15 '22 at 22:15

score 24 · Answer 3 · edited Jul 16 '22 at 23:11

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The risk for giving hackers access to your bank account is quite low if you follow these rules:

Your banks fraud department doesn't call you. (I actually asked Barclay's fraud department after a reasonably clever attempt, how I can distinguish between a real call and a scam. Their answer: It's a scam. We don't call you). If you get a call from your banks fraud department, it's a scam.
Your bank never ever needs your passcodes, PIN numbers etc. They are the bank. They can get at everything without your help. So if anyone asks you for this information, it's a scam.
Your bank never asks you to move money into another account to make it safe. They are the bank. They can block your account at any time. Or create a new account for you and move your money, if they wanted to, but there is no reason. If anyone asks you to move your money it is a scam.
Calling your bank: To make sure you are actually calling the bank, hang up the phone, call someone you know personally and talk to them, hang up, then call the bank using a published number (for example on the back of your bank card). Scammers can pretend that their calls come from your bank. They can also keep a call running when you hang up. That's why you call someone else (and talk to them), so the scammer's call is definitely hung up, and then you call a published number, so you will talk to the bank.

edited Jul 16 '22 at 23:11

briantist

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answered Jul 15 '22 at 11:16

gnasher729

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In principle a scammer could defeat the check in step 4 by connecting you to your friend via the scam switchboard. Probably the step 4 technique isn't widespread enough for scammers to bother doing that. – bdsl Jul 15 '22 at 12:19
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I've had calls from both HSBC's and First Direct's fraud (or similar) departments before – the principle of caution is still important but it's not out of the question for this to happen. – dbmag9 Jul 15 '22 at 12:34
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@dbmag9 You think you've had calls from them... :-) – Reinstate Monica Jul 15 '22 at 14:36
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@ReinstateMonica the call can as well be legitimate. As in "There is an outstanding issue XXXXXX. Your card or account or internet banking is blocked for good. Visit any of our offices at your convenience to sort it out. Your money are safe. ". – fraxinus Jul 15 '22 at 15:00
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I know people who have gotten real calls from their bank due to fraud. Then they (my customers, not the bank) call me to clean up their computer from the (typically) remote-control software that the bad guys used (via social engineering to get it started) to get into their computers and from their computers into their bank accounts. Bank calls you, you say "OK, I'll call you back" and call back with the number from your credit card or bank statement, etc. is very safe - or go into a local branch (if banking hours and local) is the safe way to handle it. – manassehkatz-Moving 2 Codidact Jul 15 '22 at 17:50
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@manassehkatz-Moving2Codidact, I've gotten real calls from my bank about potential fraud. The conversation went something like this: Them: "Hello, this is the fraud department with [bank]. Did you just authorize a charge of $several thousand on your credit card?" Me: "I just placed an order for a new computer." Them: "Thanks. We'll let the transaction through." – Mark Jul 16 '22 at 02:15
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They can also keep a call running when you hang up What does that mean? (technically speaking) – WoJ Jul 16 '22 at 14:47
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Your banks fraud department doesn't call you Yes it does. Mine (Boursorama in France) called me twice to confirm that the transaction (they named the transaction and the amount) should go through. To which I said "yes" and that was all. – WoJ Jul 16 '22 at 14:48

score 1 · Answer 4 · answered Jul 15 '22 at 11:17

There is a risk that the bank that holds your funds suffers a major IT systems failure. If that happens, you might be unable to send or receive any funds, and if it went on for long enough, it is possible that your property deal would fall through.

I am in a similar situation and this is the risk that scares me the most, because I have absolutely no control over it. I have not been able to find any recent statistics but this gives you some idea of the scale of the issue as of a few years ago:

https://www.theguardian.com/money/2019/mar/04/uk-banks-hit-daily-by-it-failures-halting-payments-says-which

I also remember an UK friend sending me an article about 7 years ago. Something about some banks having a glitch and the savings of all the clients dropped to 0 or something. — Clockwork, Jul 17 '22 at 14:25

How safe is money in the bank?

4 Answers4