Offshore banking has been getting a lot of bad press lately. With celebrities and wealthy business-owners coming under fire for hiding their money away in these kinds of accounts to avoid paying domestic tax on their earnings. However, what you probably didn’t realise is that you don’t have to be incredibly wealthy to open and benefit from an offshore banking account, nor is it illegal or immoral to do so.
To help you decide whether an offshore account could be good for you or not, in the following article we will discuss what they actually are and some of the benefits you can reap from opening one.
What Are Offshore Accounts?
As the name suggests, offshore accounts are accounts that are with banks that are not located within the UK. Many people nowadays work online and therefore earn money in other currencies as opposed to GBP, such as Euros and USD. It therefore makes sense to open an account in the currency that you are being paid, as you then avoid the unnecessary loss you can suffer at the hands of the exchange rates. Although there are some accounts that can only be opened by people living outside of the UK; most offshore accounts are open to all UK residents over the age of 18.
The misconception that offshore banking is only for celebrities and the wealthy is simply not true because although there are some accounts that require a deposit of £5,000, a good number can be opened with just £1.
Could Offshore Banking Be Good For You?
Where you choose to keep your money is obviously a personal decision that only you can make and even with some of the great benefits they offer, offshore bank accounts will not suit everyone. However, if you are planning to retire somewhere abroad, work abroad or are paid in a foreign currency or just travel overseas regularly, it makes sense to keep some money in an offshore account.
You should keep in mind though – if you are only going to save a small amount of money and need easy and regular access to your savings; you may want to consider a domestic account instead of an offshore one. Additionally, even though there are accounts can be opened with a deposit of just £1, some transactions such as withdrawals and transfers for offshore bank accounts can cost a fee of up to £25.
Understanding The Types Of Offshore Accounts
When it comes to offshore banking, there are 2 standard varieties – those with a fixed rate of interest and those with a variable rate of interest. Though they lack the stability of a guaranteed rate of interest, when you open variable interest rate offshore accounts you are normally able to access your money easily and receive introductory bonuses.
While fixed interest rate offshore accounts offer stability in terms of a guaranteed rate of interest, you normally have to deposit and keep money saved in the account for anything from 1 to 5 years before you can access.