In light of the credit crunch and global market turmoil, every sensible saver should be asking themselves: “Is my money safe?”

The most important thing to understand is that under the Financial Services Compensation Scheme, the first £35,000 you have in a British bank is protected.

When it comes to savings, savings accounts, cash ISAs and current accounts when you are in credit, the rules are a bit more complicated.

Firstly, the rules are per institution, not per account, meaning that you get the protection for each company independently registered with the Financial Services Authority.

Secondly, if you have a joint account, the protection is doubled — up to £70,000.

Over the years, many banks have merged or been taken over, blurring the lines over what officially constitutes a financial institution.

This means you only get one lot of £35,000 for the whole of HBOS, which includes the Halifax, Bank of Scotland, Birmingham Midshires and others. Yet if you had money in the Royal Bank of Scotland, NatWest and Tesco, which are all part of the giant RBS banking conglomerate, you would be separately protected in each of them.

If you are worried, the best thing to do is spread your savings among a number of top-paying bank accounts.

To see which banks are linked, go to www.moneysavingexpert.com/savings/safe-savings