Foreign Currency Savings

mjandar

About four years ago my wife and I sold our holiday home in Florida and, when all fees & IRS requirements had been paid, we had about $72,000 lodged in a joint account with the Bank of America.

The exchange rate, at the time, was not very favourable so we left the full amount in Dollars but transferred a lump sum from there into a joint Dollar account with the Royal Bank of Scotland in the UK.

Neither account pays much interest but currently we have a little over $11,000 in the Bank of America (at 1.99%) and a little over $61,000 in the Royal Bank of Scotland (at 0.05%).

We're not desperately wanting access to this money so we are content to wait until the exchange rate is more favourable to us but, in the mean time, do you have any suggestions as to how we could make the money work harder for us?

occamsrazor

If you are able to open savings accounts in the U.S. (generally you need to be resident in the U.S., although not necessarily a U.S. citizen) you can probably get around 3.5% currently, and the big advantage of U.S. banks is your deposits are generally covered up to $100k by the FDIC.

If you want a more UK-based operation, Citibank UK will give you 2% on US dollars in their savings account (it's higher for the first 6 months promotional offer but 2% is the normal rate), which is covered by the FSCS scheme - £35k covered or equivalent in foreign currencies.

If you're happy to go offshore Kaupthing Edge in Isle of Man will give (a rather outstanding) 4.5% on US Dollars, and Anglo-Irish also in IoM will give 3.5%. Note the compensation in IoM is not as good as the UK or US, 75% of savings up to £20k, but depending on the amount you want to save it may be fine for you.

I believe you'll get double the compensation coverage if you hold it as a joint account with your wife, in all the countries.

mjandar

Thanks for that. Very Interesting. I'm tempted to have a look at the IoM accounts.