Australian Banks Offer 6.5%

BurnerF1

I am new to this website so apologies if this is not a new thread.

My question is simple.

Can I deposit money in an Australian Bank?

If so, what are the pitfalls?
If there are no pitfalls why isn't every one doing it? They are offering 6.5%.

Internet banking and electronic transfer would make this process seem relatively easy. I currently Bank in the UK
Let me know what you know.
Cheers
BurnerF1

Sceptic001

Given how difficult it is these days to open a UK bank account in sterling, I suspect that you would have considerable problems opening an Aussie bank account! It is probably possible to open an Aussie dollar-denominated account with a UK bank, but even if it offered an attractive rate it would expose you to currency risk. Currency markets are extremely volatile. Sterling has depreciated by about 20% against the AUD in the last 12 months. Add in the costs of converting your currency, and the risks considerably outweigh any prospect of gain, unless you fancy yourself as a currency speculator and can afford to lose a large proportion of your money.

amcluesent

>If so, what are the pitfalls?<

Instability in the Aus government, their female PM has called an election after 3 weeks in office. Suggest that the interest rate is a sign of weakness not strength and is being used to prop-up the Aus currency for political expediency.

oz0707

I moved here from oz 4 years ago. They have had savings rates of certainly 4%+ since i can remember

cashbackproblems

Currency fluctuations might hit you, maybe its worth doing some research on possible movements? If however you intended to spend the money in Aus it would be a good idea, i earned some money in India a few years back and have an account over there paying 10%, not sure how it works opening it online tho..

BurnerF1

"Sterling has depreciated by about 20% against the AUD in the last 12 months. Add in the costs of converting your currency, and the risks considerably outweigh any prospect of gain, unless you fancy yourself as a currency speculator and can afford to lose a large proportion of your money."

Thought there was a catch. No matter what you do, savers seem to get clobbered in UK. At current inflation levels I will lose 20% over the next 4 years.

Thanks for advice

sabretoothtigger

If sterling went down then that means you would gain 20% when converting it back to the uk. Thats the positive end, what you dont want in this scenario is for sterling to do very well vs Australian dollars while you have your money out of the country

Sterling doing exceptionally well is unlikely and the risk is relatively low because of that I think. All the same you would be currency speculator which is the opposite end of the risk spectrum to saving for most people.
If you are going on holiday down under anyway then its money you would spend there anyway perhaps and that'd be pretty acceptable risk


Some people spend their whole working week calculating forex trends so its an expert field, currency is the worlds largest market place bigger then stocks or bonds Im told
I dont believe its massively risky as Australia is hardly a rogue state, some might even say they are better off then the uk with far more commodity strength to their trade balance.
The high rates are just because they are sensible, we should have the same but we cant afford the cost


Should perform similar to the Canadian dollar I think, with large land mass, low population and rising demand for their commodity wealth their economies do not seem overly burdened or off balance from what Ive read

sabretoothtigger

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The trend favours Australia but considering the rate difference thats not surprising so you would have to estimate that for the future also

ERICS_MUM

As well as the exchange rate question, you might want to consider some of the following:

Are Australian banks covered by a deposit protection scheme similar to the UK's Financial Services Compensation Scheme run by the FSA ?

Are you looking at one of the nationwide banks (NAB, ANZ, Commonwealth Bank) or a smaller regional bank ?

Does the Australia bank or Financial Services regulation body impose any max or min balances, limits, money laundering checks, deduction of tax from interest on foreign deposits? Would you also have to declare the interest to HMRC and pay UK tax on it ?

Would you have instant access to your money, is there a notice period, would you have to pay a fee for getting the money back without notice, is it a fixed term deposit ?

Is it an actual account where your principal deposit is safe, or a bond-type deposit which is invested and where your principal amount could decrease in value. Is the rate of 6.50% actual or based on past performance ?

Would you have on-line banking access to your account and statements ?

What would your Aus and UK banks charge to send money between your accounts when you need to, and how would these charges impact your interest income ?

Have you checked Aus $ accounts/rates offered by the London branches of Australian banks, are they covered by the FSCS
?
Have you checked your UK bank to see if they offer UK-based Aus $ accounts and at what rate ?

Linda

oz0707

got 2.7 those were the days...living there getting 20 quid it was worth almost $60, now not even 40! That was when stuff was cheap there two. inflation seems to have rocketed over there.

bendix

You can't open a bank account in Australia without having an Australian address and tax code. I have an account over there, but only because I used to live and work there, and I've kept it open.

I also have accounts in NZ and Thailand. Most of my cash is currently in New Zealand in a variety of term deposits variously earning 5.1%, 6% and 7.3% depending on the term.

Currency risk doesn't bother me at all. The money has been in NZ for years and will stay there for a few more years. I will use the money not in NZ or the UK, but in Thailand so the only issue for me is the strength or otherwise of the Baht. But, as I have property and cash in Thailand too, as well as savings and a pension fund in the UK, any currency issues will be flattened out by spreading my resources around.

At the end of the day, there's no point sweating about stuff you can't change.