better rate of interest

Cynical-me

When I was last in Australia last year, I left about $5000 in an investment account which is realising over 6% interest (on which I pay local taxes)

I have about £5000 in a British Building Society account which is paying me well under 1% interest.

I have no plans to use this UK money for the forseeable future and was wondering whether I should transfer the £5000 to my Australian account to get a better rate of interest.

Can anyone advise me of any snags in this idea?

Thank you

apt

There are a few potential snags. You are taking a foreign exchange risk. If the pound weakens against the Australian dollar you will gain, but if it strengthens you will lose. If you are a UK taxpayer and resident you may be liable to UK tax on your interest. Also check whether you are allowed to keep your Australian account if you are no longer resident there. You may need money in Britain for unseen circumstances which would be a problem if you've transferred all your savings to Australia.

blueberrypie

There are several places you can earn more than 1% on your savings in the UK. For example: a LTSB Vantage account will pay 4% if you transfer £1k out and back in once a month. A HBOS ISA will pay you 3% tax-free. A Regular Saver with First Direct will pay 8% (maximum monthly deposit £300). And so on.

Cynical-me

Thank you for your replies.

The Australian Bank is aware I am non-resident and that issue does not seem to be a problem.
I do have other (NS&I) savings here which I could tap in to if there was a need.
With the way this country is going, I am not too worried about the pound strengthening against the AUS dollar - its actually been slipping ever since my first visit to Australia 25 years ago.

The opportunity to get a better rate over here souinds interesting and I will follow up the suggestions.

Howaver, should I decide at some point to bring my Australian funds over to the UK, what would be the most unobtrusive way of doing this?

Thank you

CLAPTON

Cynical-me wrote: »

Thank you for your replies.

The Australian Bank is aware I am non-resident and that issue does not seem to be a problem.
I do have other (NS&I) savings here which I could tap in to if there was a need.
With the way this country is going, I am not too worried about the pound strengthening against the AUS dollar - its actually been slipping ever since my first visit to Australia 25 years ago.

The opportunity to get a better rate over here souinds interesting and I will follow up the suggestions.

Howaver, should I decide at some point to bring my Australian funds over to the UK, what would be the most unobtrusive way of doing this?

Thank you

bizarre
if you really feel there is no prospect of the pound strengthening against the aus dollar then it's a no brainer

Cynical-me

Why bizarre?

How much would the pound have to strenghten to knock out a 600% improvement in the rate available in Australia?

Actually, the reason for my Original Post was to test the water for any illegality in what I had in mind. (Offshore accounting for example)

Derivative

Cynical-me wrote: »

Why bizarre?

How much would the pound have to strenghten to knock out a 600% improvement in the rate available in Australia?

Actually, the reason for my Original Post was to test the water for any illegality in what I had in mind. (Offshore accounting for example)

Comparing 1% to 6% is daft as you can get far better than 1%.

If GBP-AUD raises 5% this year, then your 5% 'extra' interest is nothing. Of course it could possibly go the other way, I'm no forex expert.

Cynical-me

I think you're stuffed whatever you do:

blueberrypie suggested First Directs Regular Saver at 8%, but when you read the conditions - especially the fact that you can only invest £300 per month, then by my reckoning. the true rate for putting in £300 every month equates to just over 1% interest at the end of the year!

rb10

Cynical-me wrote: »

I think you're stuffed whatever you do:

blueberrypie suggested First Directs Regular Saver at 8%, but when you read the conditions - especially the fact that you can only invest £300 per month, then by my reckoning. the true rate for putting in £300 every month equates to just over 1% interest at the end of the year!

No, putting money in at 8% gives you 8% at the end of the term.

You just have to remember that as the balance is being gradually built up over the year, and as interest is calculated daily, you won't get 8% of the final balance.

You can expect to get around £156 before tax if you put in the maximum of £300 per month - not bad on an average balance of £1800!

Cynical-me

Thanks rb10, I would appreciate your calcs though, as when I went through a year of months adding £300 per month I came out with a much lower figure - as I understand it, and for example, the last monthly deposit would only attract 1/12th of 8% on £300 in interest. (i.e, only the first months deposit of £300 would get the full 8% interest.

I hope I am wrong - could you explain please?

Thank you.

drlabman

Cynical-me wrote: »

Thanks rb10, I would appreciate your calcs though, as when I went through a year of months adding £300 per month I came out with a much lower figure - as I understand it, and for example, the last monthly deposit would only attract 1/12th of 8% on £300 in interest. (i.e, only the first months deposit of £300 would get the full 8% interest.

I hope I am wrong - could you explain please?

Thank you.

You're wrong. rb10 is dead right.

It gives the actual figure on the First Direct website, under the FAQ "How much interest will I get?" (Not sure if I can post a link).

During the period of the Regular Saver, interest is calculated on the daily cleared balance on your Account and applied to your Account on the anniversary of the account opening. For example, if you save the full £300 per month for 12 months you would receive approximately £156 gross, (£124 net) in interest at the end of 12 months.