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More than half US dollar offshore savings accounts pay less than Fed rate

Tuesday 26th January 2010
By Mike Jones

Analysis by Investec Bank found more than half (52%) of US dollar offshore savings accounts are paying less than the US Federal Reserve ("Fed") rate of 0.25% in interest on deposits of $50,000.

In addition, Investec’s quarterly US Dollar Offshore Savings Index reveals that the average rate of interest paid on US dollar offshore savings accounts for balances of $50,000 fell by 0.04% to just 0.41% during the three month period 28 August 2009 to 30 November 2009. This is despite the Fed rate remaining static since it was cut to 0.25% on 16 December 2008.

Just over a fifth (21%) of accounts continue to pay no interest at all. However, despite some accounts offering such low and sometimes non-existent returns on clients’ deposits, encouragingly the Index revealed that just over a third (34%) pay 0.5% or more. Five of the 33 US dollar offshore savings accounts available were paying clients 1% or more in interest as at 30 November 2009.

Laura Preston of Investec in Guernsey said: "While the Fed rate remains so low, it is more vital than ever that savers’ keep a close eye on the rate of interest they’re receiving.

"The top end of the market remains competitive and it is still possible for offshore savers to find an account offering a consistently good rate of interest."

The US dollar Investec Horizon Account is currently offering a market leading 1.36% AER (1.35% gross); 1.10% above the Fed rate of 0.25%. The Investec Horizon account is also available in Euro or Sterling and is available with different interest rates to savers with, €50,000, £25,000 or above.

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