Opening a foreign fixed account - is it worth?

JudeLaw

As I'm tired of catching the best rate on fixed accounts in our banks I decided to look into foreign accounts. Of course, it will not be an FSCS in place (some local scheme probably) but the % are better and maybe it's worth to try with some small amount £5k?

What do you think? Some past bad experiences:eek:?

AlanP_2

What you will be doing is speculating on currency movements and relationships.

Do you know much about Fx trading?

londoninvestor

JudeLaw wrote: »

but the % are better

A higher interest rate in a foreign currency is offset by the shape of the FX forward curve; higher-interest currencies depreciate against lower-interest currencies:

https://www.tutorialspoint.com/international_finance/interest_rate_parity_model.htm

So you'd expect your deposit to have declined when converted back to GBP at the end of the term.

londoninvestor

Related thread here:
https://forums.moneysavingexpert.com/discussion/5838916/can-i-open-a-savings-account-abroad

msallen

JudeLaw wrote: »

As I'm tired of catching the best rate on fixed accounts in our banks I decided to look into foreign accounts. Of course, it will not be an FSCS in place (some local scheme probably) but the % are better and maybe it's worth to try with some small amount £5k?

What do you think? Some past bad experiences:eek:?

Theoretically you may be able to get somewhere in the region of 100,000% on a Venezuelan savings account at the moment (if any are currently on offer there, which I doubt). Yet when you withdrew it and converted back to GBP you would in all likelihood have lost money because of the intervening variation of the exchange rate between GBP & VEF. I'm sure you appreciate why this would be a bad idea, and it is simply a more extreme example of the downside of trying to get a higher return in a foreign currency.

GDB2222

Going off at a tangent, HSBC do a UK based Euro account. No interest, but no charges either.

justme111

I doubt it's worth it but it is irrelevant as you can not open them being British ( apart from a handful of no interest ones aimed at brits)

stephen160

i own a villa in Florida so have an american bank account, their savings account is 2.5% if linked to a current account.
steve

JudeLaw

justme111 wrote: »

I doubt it's worth it but it is irrelevant as you can not open them being British ( apart from a handful of no interest ones aimed at brits)

why I can't? There are some restrictions for us? Where?

justme111

Everywhere. You need to be citizen of a particular country to have bank accounts in that country usually. Again , dies not matter much as stable currencies all have rates as ours I guess and you probably will not fancy getting a bank account in Zimbabwe.

londoninvestor

justme111 wrote: »

You need to be citizen of a particular country to have bank accounts in that country usually.

Residency restrictions are common - citizenship restrictions seem to be rarer.