Following the collapse of the Icelandic banks a few months ago, there seemed to be a trend towards British savers pulling their money back home, to give themselves peace of mind that their money was guaranteed under the government’s Financial Services Compensation Scheme.
However, recent interest rate cuts by the Bank of England have led to savings rates falling to their lowest ever levels, and it looks like savers are once again looking overseas to try and get more interest on their savings – their fears about the security of their money seem to have been forgotten in the hunt for higher returns.
Foreign banks now occupy 4 out of 5 of the top savings account rates as British banks struggle to offer anything competitive after receiving such a poor interest rate from the BoE.
Indian Bank ICICI, Nigeria’s First Save and the Bank of Cyprus are offering some of the best rates, and despite being foreign owned, both ICICI and First Save do offer the full £50,000 compensation offered by the FSCS, whilst Bank of Cyprus customers would have to apply to the Cyprus government’s compensation scheme for the first €20,000 of any claim, and the FSCS would make up the difference once this has been paid. It’s an added complication should the bank go bust that may put some savers off.
The lesson here is that despite savers’ fears, some foreign banks can provide the same safety net as UK banks, but can also offer greater rates of return on your money than their British counterparts.
If you are searching the best buy tables for good savings rates and are tempted by an overseas bank, be sure to check it is covered by the FSCS (find out more information on their website) or ask the bank themselves!
photo credit: VJ_fliks
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