Finding the best offshore savings account for expats

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Offshore savings rates for expats keep tumbling despite the Bank of England pegging rates at 0.5% for yet another month – but the trick of finding the best deal is ignoring the marketing hype.

Experienced savers will understand that ignoring the rate and looking at how much money will sit in the account at the end of a fixed term is the sensible way to bank.

Don’t forget banks and building societies want you money but won’t couch the terms of their deals so customers with nothing less than a degree in maths can accurately compare features and benefits.

Take the accounts from Alliance & Leicester’s 12-month fixed rate at 3.5% and the Lloyds TSB offering of 4.5% over five years to expat savers.

The shorter tie-in lets a saver have access to their cash without incurring an interest penalty – and the likelihood is another 12-month fixed deal at a similar rate will be around at the end of the year.

Put £10,000 at 3.5% for a year and end the term with £10,350 – conveniently ignoring inflation and tax.

The same £10,000 in the Lloyds five year fix earns £10,450 after a year, growing to £12,462 at the end of the 60 month term.

Taking 12-month fixes at 3.5% gives £11,877 at the end of five years – and that £575 is the cost of easier access to more liquid funds.

The key to finding the right savings account is forgetting the interest paid and rating the deal on the minimum deposit, safeguards for your cash and how long you and your money are kept apart.

Once you have a short list of suitable accounts matching your savings spec, pick the one with the best interest rate.

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