Dozens of offshore banks and finance houses are offering more than 2,250 savings accounts – but most of the rates are within a whisker of each other.
Top rated is the Norwich & Peterborough Building Society’s Gold Savings Account – a 12-month fixed term offering 5% on a minimum £20 deposit protected under the UK’s Financial Services Compensation Scheme.
Clydesdale Bank has slipped in to the leading rates with a five-year deposit paying 4.15% on a minimum £10,000 deposit protected under the Guernsey Banks Deposit Compensation Scheme.
Some offshore providers have already cut rates in advance of the Bank of England’s monetary policy committee meeting, wrongly anticipating that rates might fall to 0.25%.
What goes down often doesn’t go up
Interestingly, some providers cut their rates believing official rates will decrease – but they rarely go up if the rates stay the same.
The main offenders who blinked first in the savings rates stakes for this month’s round of cuts were Alliance & Leicester, Lloyds TSB International and Santander Private Banking.
The view from their analysts is the rate will come down at some stage this year to 0.25% – and is likely to stay at 0.5% or lower for up to five years.
The result for expats is lower rates on fixed term deals.
Latest rate cut is the deepest
For Alliance and Leicester the first cut for two months was the deepest – a swingeing 0.35%.
Alliance & Leicester threw out a raft of fixed rates leaving the one year fixed rate bond paying 3.2% with a minimum £5,000 on deposit.
Permanent Bank International has risen in the rankings with a five-year offshore bond paying 3.84% on a minimum £20,000 deposit protected under the Isle of Man Deposit Scheme. Permanent also offers a two year fixed rate 3.68% bond on the same deposit terms.
Another higher rate of note is Lloyds Bank International’s five-year fixed rate bond at 4.3% on a £10,000 deposit protected in the Isle of Man.
Short and sweet
For savers not wanting to tie up their money for such a long term fixed term period have some limited choices.
Lloyds TSB has a one year fixed rate paying 3.1% with a minimum £10,000 deposit protected on the Isle of Man. Barclays Wealth has 2.25% on the same terms but protected in Jersey.
Over six months, Barclays Wealth pays 1.75% on a £10,000 deposit.
Skipton International pays 2.75% over 180 days and 2.50% over 120 days on a minimum £10,000 deposit .
No notice accounts can pick up 2% for a £5,000 deposit from Lloyds or 1.6% from Skipton for a £10,000 minimum input.
Offshore saving explained
Offshore fixed rate bonds or savings accounts are best-suited to savers looking to set aside a lump-sum for a fixed term. Drawing the money early can result in interest penalties. The rates tend to improve for longer terms – mainly three to five years.
Many of the other offshore saver rates are pitched between an unexciting 2.5% and 3.5% for two or three years. All the above rates are for Sterling accounts open to offshore savers