Estimated that 75% of savers could net 20% more income if they knew where to look
A new report from a leading expat publisher suggests that we are just not receiving the best deals on our savings accounts. For those of you looking to get the very best offshore bank rates for your money, there are some great rates out there if you know where to look. What most expatriates are not aware of, and what most banks don’t want you to know, is that most of the leading banks, offshore and onshore, have TWO ways to increase the amount they hold on deposit, and can therefore lend others or invest for a profit.
No. 1 – Advertising
The first is through advertising. Each bank when they need more deposits advertises an attractive rate of interest. You apply; prove who you are and send a certified copy of your passport and proof of address. Yet, you will often find at the end of the fixed term that your bank rate is no longer as attractive as it was initially when comparing to the rest of the market. These terms can be as little as three months and all you have to do is read the small print to realize what the banks are doing by offering you interest above or rollover your deposit beyond that of other banks. It just means you are likely to invest with them but it doesn’t mean that their bank is the best place for your money. When you become aware of what has gone on, what do you do? You withdraw your money and start looking for the next home for it. All the while this means that your hard earned cash is not earning interest. You then need to go through the whole process again – proving who you are where you are and where the money came from and this means certified documents again. These headaches often lead to many of us not bothering to change the bank provider. What is more, when you live in Europe, you come under the remit of the EUSD and are being subjected to an automatic exchange of information or a withholding tax deducted at source.
No. 2 – Offer Institutional Rates to pension funds and large investors, or groups
The second option is to offer institutional bank rates to large financial advisers, and their clients, life assurance companies and pension funds etc. These will often be much higher than what you may see advertised because the advertising does not need to be paid for. If you seek comprehensive and professional advice you could benefit from these sorts of rates. A good adviser may also be able to structure a totally confidential holding vehicle for you so that there is no deduction of tax, or at the very least tax deferral. Consequently, you can legally avoid the exchange of information required by the EUSD or the 20% deduction of your gross interest. By using such a vehicle, you can switch deposit rates with only a faxed instruction and avoid the administration of proving who you are every time you wish to change the deposits to more attractive rates i.e. please release my deposit from bank A at 6.5% and place with bank B at 7.2%. This is then done immediately for you. Another benefit is that through such a structure, you can diversify your bank deposits through various banks or building societies so that you do not hold all your eggs in one basket and expose yourself to any 1 bank being a victim of the credit crunch.
