Savings of up to £85,000 will be safe if a bank or building society collapses from now – following a £10,000 rise in the protection level.
The weakening of the pound against the euro since the Brexit vote led to the change in the threshold.
The amount of compensation payable is set at €100,000 across the European Union, so significant currency moves can alter the level for UK savers.
The change means the protection returns to its pre- July 2015 level.
It covers money in current accounts, savings accounts, and cash ISAs.
Under the Financial Services Compensation Scheme (FSCS), up to £85,000 per person, per institution is now protected if a bank, building society or credit union goes bust. In other words, if the bank collapses, savers will get any money in these accounts up to £85,000 paid back in compensation.
Joint accounts have a protection level of £170,000.
Mark Neale, chief executive of the FSCS, said: “The limit increase will protect even more of peoples’ savings. The new limit will protect about 98% of people so it is worth people knowing their limits.”
The scheme has a protection checker for savers.
Some MPs have been critical of the way the limit has fluctuated and have called for a settled level to maintain public awareness.
At the start of the banking crisis in 2007 the maximum payout for depositors was just £31,700 per person, made up of 100% of the first £2,000 and then 90% of their next £33,000.