Rates don’t look good for offshore savers as inflation and tax more or less wipes out even the best fixed rate offshore account.
The outlook is unlikely to improve as banks and building societies continue the trend of shaving their rates that has gone on apace for the past few months.
Way out in front and likely to last long is Lloyds TSB International’s five-year fixed term deposit rate of 4.30% gross, requiring a minimum deposit of £10,000.
Besides this outstanding rate, everything else looks decidedly miserly.
Lloyds TSB International also offers the next best fixed rate – 3.75% for three years with the same £10,000 deposit.
The field is clustered between 3.50% and 3.70%, with six fixed term deals varying from two years to five years.
Don’t expect rates to rise soon
The bank’s are offering up little to choose between their accounts – although Alliance & Leicester is promising 3.70% fixed until September 29, 2017, with a £5,000 deposit. The Co-Operative Bank pays 3.62% for the same deposit over three years.
For shorter term money, take a look at Alliance & Leicester’s 3.20% for £5,000 on deposit fixed until September 30, 2013 or less inviting is The Bank of Ireland’s high interest return account of 3.20% for £25,000 on deposit for a year.
Savers should not put off investment decisions on the hope of base rate increases.
The US Federal reserve has repeatedly stated rates will stick until at least well in to 2014, and the European Central Bank and Bank of England may consider shaving their record low rates even further to stimulate faltering economies.
AIB will close for business at the end of this month and has written to customers asking them where they want to transfer their funds. This narrows the market even further for offshore savers and removes some incentive for other offshore institutions to maintain competitive rates.
From zero to hero
The rates are pretty disappointing, considering offshore banks and building societies are offering around 320 different accounts – from sterling, euro and dollar current accounts offering zero interest to the Lloyds TSB International five-year fixed term deposit at 4.30%.
With European Union inflation running at around 2.6% and UK inflation even higher, few savers will find the rates exciting – especially when income tax is taken in to account.
The prospect of further quantitative easing in the UK, Europe and USA is still a stark prospect for many savers – and a not a pleasant thought for those on a fixed income.