Expat offshore fixed rates remain unchanged after some shuffling of deals over recent weeks and are expected to stay the same until next month.
Choosing the right account remains a headache for expats – the risk is locking away cash for three or five years against the likelihood that interest rates will rise and possibly overtake them during the tie-in period.
Conversely, the short term rates barely add up to more than the combined effect of tax and inflation.
For expats in Spain, the most popular British expat destination, the offshore rate would have to return at least 0.7% to account for inflation plus income tax on earnings at 20%.
Expat savings dilemma
On top of that, don’t forget the weaker euro losing out on currency exchange rates with the pound, plus the costs of switching the money across currencies also eating into profits.
Putting £5,000 into Conister Bank’s two-year fix of 1.99% earns just £95 in interest – subtract the 0.7% loss to inflation and tax brings the rate down to 1.92%. That reduces the return to £94.33. Then deduct the costs of switching the money between currencies and what is left seems hardly worth the bother.
Not that Conister’s deal is any worse than those offered by other offshore savings bank or building society.
The dilemma is leaving the money sitting in a current account earns even less and still leaves the capital losing spending power to inflation.
| Offshore Fixed Term Savings Accounts - by interest rate | |||
|---|---|---|---|
| Provider | AER | Term | Deposit |
| Conister Bank | 3.00% | 5 Year Bond | £5,000 |
| Skipton International | 2.75% | 5 year Bond | £10,000 |
| Conister Bank | 2.50% | 3 Year Bond | £5,000 |
| Nationwide | 2.30% | 3 Year Bond | £5,000 |
| Skipton International | 2.25% | 3 Year Bond | £10,000 |
| Permanent Bank | 2.11% | 5 Year Bond | £20,000 |
| Permanent Bank | 2.06% | 3 Year Bond | £20,000 |
| Santander | 2.05% | 3 Year Bond | £500 |
| Permanent Bank | 2.03% | 2 Year Bond | £20,000 |
| Permanent Bank | 1.99% | 18 Month Bond | £20,000 |
| Conister Bank | 1.99% | 2 Year Bond | £5,000 |
| Permanent Bank | 1.84% | 15 Month Bond | £20,000 |
| Conister Bank | 1.75% | 1 Year Bond | £5,000 |
| Leeds Building Society | 1.50% | 1 Year Bond | £1,000 |
| Newcastle Building Society | 1.50% | January 22, 2016 | £500 |
| Permanent Bank | 1.50% | 1 Year Bond | £20,000 |
| Santander | 1.50% | 2 Year Bond | £500 |
| Nationwide | 1.45% | 1 Year Bond | £5,000 |
| Newcastle Building Society | 1.40% | January 22, 2015 | £500 |
| Nationwide | 1.36% | 6 Month Bond | £5,000 |
| Offshore Fixed Term Savings Accounts - by deposit amount | |||
| Provider | AER | Term | Deposit |
| Santander | 2.05% | 3 Year Bond | £500 |
| Newcastle Building Society | 1.50% | January 22, 2016 | £500 |
| Santander | 1.50% | 2 Year Bond | £500 |
| Newcastle Building Society | 1.40% | January 22, 2015 | £500 |
| Leeds Building Society | 1.50% | 1 Year Bond | £1,000 |
| Conister Bank | 3.00% | 5 Year Bond | £5,000 |
| Conister Bank | 2.50% | 3 Year Bond | £5,000 |
| Nationwide | 2.30% | 3 Year Bond | £5,000 |
| Conister Bank | 1.99% | 2 Year Bond | £5,000 |
| Conister Bank | 1.75% | 1 Year Bond | £5,000 |
| Nationwide | 1.45% | 1 Year Bond | £5,000 |
| Nationwide | 1.36% | 6 Month Bond | £5,000 |
| Skipton International | 2.75% | 5 year Bond | £10,000 |
| Skipton International | 2.25% | 3 Year Bond | £10,000 |
| Permanent Bank | 2.11% | 5 Year Bond | £20,000 |
| Permanent Bank | 2.06% | 3 Year Bond | £20,000 |
| Permanent Bank | 2.03% | 2 Year Bond | £20,000 |
| Permanent Bank | 1.99% | 18 Month Bond | £20,000 |
| Permanent Bank | 1.84% | 15 Month Bond | £20,000 |
| Permanent Bank | 1.50% | 1 Year Bond | £20,000 |
| This list covers most major providers but is not exhaustive. Account rates and minimum deposits are likely to change or be withdrawn at short notice. Some minimum deposits are 'open with' amounts and are scaled up to the headline rates with a bonus or increased deposit amount. | |||
