Opening a foreign fixed account - is it worth?

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JudeLaw
JudeLaw Posts: 4 Newbie
in Savings & investments
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:?
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  • AlanP_2
    AlanP_2 Posts: 3,253 Forumite
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    What you will be doing is speculating on currency movements and relationships.

    Do you know much about Fx trading?
  • londoninvestor
    londoninvestor Posts: 1,350 Forumite
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    edited 15 February 2019 at 7:42PM
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    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
    londoninvestor Posts: 1,350 Forumite
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    Related thread here:
    https://forums.moneysavingexpert.com/showthread.php?t=5838916
  • msallen
    msallen Posts: 1,494 Forumite
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    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
    GDB2222 Posts: 24,670 Forumite
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    Going off at a tangent, HSBC do a UK based Euro account. No interest, but no charges either.
    No reliance should be placed on the above! Absolutely none, do you hear?
  • justme111
    justme111 Posts: 3,508 Forumite
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    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)
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
  • stephen160
    stephen160 Posts: 71 Forumite
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    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
    JudeLaw Posts: 4 Newbie
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    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
    justme111 Posts: 3,508 Forumite
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    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.
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
  • londoninvestor
    londoninvestor Posts: 1,350 Forumite
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    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.
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