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what are the risks of using foriegn savings account?
I have noticed that banks outside of Europe offer very high interest rates of fixed deposits in savings accounts - why would that be a risk?
I thinking in terms of inflation, devaluation, and political instabilities.
2 Answers
- exactdukeLv 78 years agoFavorite Answer
The president of the country decides he needs a new fleet of Mercedes for himself. He goes to your bank, and uses your money for this. But not to worry, the bank has IOU's from the president.
The bank president runs off with the pretty 21 year old teller (and takes your money with him).
Not all banks have the guarantees of their governments to cover these (and many other) circumstances. Generally these countries banks are paying higher returns for a reason - which you mention, and there are others. I suggest you take note of these.
We had that situation in our country. A scammer - Alan Stanford opened/operated a bank in Antigua, which was offering 8% interest on deposits. After years, and years of the good life by this guy, the bank finally collapsed, and these depositors lost everything. Then they want our government to make good their losses. Didn't happen - SORRY ABOUT THAT.
- CarenLv 78 years ago
Not guaranteed by their government. If the bank goes under, kiss money bye, bye.
They also have higher inflation.
