TSB IT problems: why we all need a backup financial plan

TSB has shown that banks can’t always resolve IT problems overnight, so all of us should draw up a plan in case it's our bank that next hits the headlines.

As TSB’s IT problems roll into a second week, it seems obvious that the bank’s problems are not temporary – or likely to be resolved soon.

We’re sorry, we know some customers are still having issues logging into Internet Banking. We’re working hard to fix this. Details of our services still affected can be found at https://t.co/yoede4Atv5 and I’m very sorry for any inconvenience this caused. Graham

— TSB (@TSB) May 1, 2018

This is despite the best efforts of IT experts in the UK and Spain, as well as CEO Paul Pester calling in the cavalry (IBM). 

For non-TSB customers, it begs the question: what would you do if your bank was down for two weeks? Or more?

Here we explain three safeguards that all of us should put in place if an IT disaster were to strike again.

Backup credit card

A backup credit card is always a good option – where else could you get thousands of pounds in a pinch?

Whilst credit cards can be expensive, it’s possible (but not guaranteed) that you can get extra fees back as compensation from your bank: Using the example of TSB, the bank has promised that no customer will be left out of pocket.

When selecting a backup credit card, there are three things to keep in mind.

Firstly, don’t get a credit card provided by your main bank. It could be affected by any IT problems and may not be the first priority for the bank to fix.

Secondly, get a fee-free card, as you may never need to use it. Also check for other fees, such as late payment, as these can rack up.

Always use a soft search to check your chances before applying, to protect your credit score.

Finally, consider the credit limit. How much might you need to spend if, say, your main account was out of action for a month?

Find a backup credit card and check your eligibility here.

Second current account

It might sound like a lot of effort, but a second current account is often a good idea and not just for IT meltdowns.

Many of us have savings accounts with other institutions, but these will be of limited help in an emergency as they don’t have debit cards and often only allow you to move money to your main current account.

If you can afford it, try and build up an emergency fund in a separate current account. 

It’s essential that your backup current account is fee-free: many UK banks will charge you if you don’t regularly deposit money in them.

It also helps if it has a decent fee-free overdraft, which you may need to use. Santander’s Everyday Current Account offers up to four months interest-free.  

Finally, try and find an account that will pay you a decent rate on your savings if you're going to maintain a sizeable balance.

Compare current accounts and overdraft terms on loveMONEY’s site

Prioritise your bills

Not being able to pay your bills is stressful, and could be unavoidable if your main bank account can’t be reached.

If there is no way around missing payments, the key is prioritising which debts you must pay off and which you can leave for later.

According to the independent Money Advice Service, the highest priority bills include Council Tax, TV licence, child maintenance, gas and electricity, income tax, mortgage or rent and hire purchase agreements.

Not paying these debts off could result in a court summons, having your heating or lighting cut off or even losing your home.

If you find you’re unable to pay these bills, contact a debt adviser urgently – you can find a free list here.

Low priority debts include overdrafts, personal loans, credit cards and water and sewerage bills. Do contact these providers to explain the situation, however, as they may be able to help and could save you hassle down the road.    

Get written evidence of any fees or marks to your credit score that you’ve incurred because of your bank’s IT problems, as these will be important when claiming compensation.

You can also complain to the Financial Ombudsman: our article explains how.