Sunday 30 April 2017

How to set up a sterling or dollar account

Who offers them?

Along with international banks such as HSBC and Investec, a lot of mainstream banks offer non-euro deposit accounts.

AIB, National Irish Bank (NIB), Permanent TSB and Ulster Bank offer non-euro deposit accounts. Bank of Ireland offers sterling accounts in Northern Ireland.

How do I open an account?

You may have to be an existing customer of a bank to open a non-euro account. If not, you will need the usual proof of identity and address to open an account.

Apart from Bank of Ireland, where you must visit a branch in Northern Ireland to open an account, you can open a non-euro currency account in the Republic with any of the banks mentioned above by visiting one of their branches. If opening an account with Investec, you may be able to do so online.

If you are a resident of the Republic of Ireland and you plan to open a sterling account in Northern Ireland with BoI, you must provide two forms of identification such as a passport, driver's licence or EU ID card. You also need to provide proof of address, such as a utility bill. To ensure you don't pay tax to the British government, you will have to complete a tax form and an EU Directive form -- both forms will be provided by the bank branch. After that, it's up to you to declare the Northern Ireland account on your tax return in the Republic.

You may need to have a pretty big nest egg to hand to open currency accounts. HSBC Private Bank Ireland, which is based in Dublin, offers a multi-currency account. However, you need at least €2m (or currency equivalent) to open one.

With NIB, you need at least €15,000 to open a currency account; with Investec, the minimum deposit is €20,000.

Some banks may be unwilling to put your savings into a currency account if you are doing so in the hope of making a quick buck.

AIB says its currency deposit account is designed to allow people to make and receive foreign currency payments -- such as rental income -- in a particular currency without having to convert the money into euro.

"The use of currency accounts is primarily to reduce exposure to adverse movements in exchange rates for customers that have economic activity in a particular currency," said a spokesman for AIB. "The use of such accounts for purely speculative purposes would be discouraged."

What currencies can I open an account in?

Most banks will allow you to open an account in the major currencies such as sterling; US, Canadian, New Zealand or Australian dollars; Swedish, Danish or Norwegian kroner; Swiss francs; and Japanese yen. Other currencies may also be available on request.

Do the accounts pay interest?

Bank of Ireland's one-year fixed sterling account pays 2.8 per cent interest, while its two-year fixed account pays 3.5 per cent interest.

With Permanent TSB, the interest rate depends on the currency, the amount saved and whether or not you want to access your money on demand -- or give 30 days' notice. The interest rate on Permo's Australian dollar account is between 3.75 per cent and 4.5 per cent for demand accounts, and between 4.25 per cent and 5 per cent for 30-day notice accounts.

If saving between £100,000 and £1m in Permo's sterling account, the interest rate is 1 per cent for demand accounts and 1.5 per cent for 30-day notice accounts. The interest rate on Permo's US dollar accounts is quite low -- between 0.1 per cent and 0.25 per cent for demand accounts, and between 0.25 per cent and 0.5 per cent for 30-day notice accounts.

Investec's 12-month fixed currency deposit accounts pay 1.1 per cent interest on US dollars, 1.85 per cent on sterling, 5.75 per cent interest on Australian dollars and 0.55 per cent interest on Swiss francs.

HSBC Private Bank's interest rates depend on the amount of money on deposit, the currencies chosen -- and how much money is saved in each currency, and the term of the account. Its basic deposit rates are usually between 0.5 and 1 per cent -- but interest rates of between 3 and 5 per cent can be available depending on the product and term.

"People are asking less about the interest rate [on deposit accounts] and more about who is giving that rate," said Rory Quinlan, head of HSBC Private Bank Ireland. "Liquidity and security are the main things people are concerned about today when saving money."

National Irish Bank's currency accounts don't pay any interest. The interest rates on AIB and Ulster Bank accounts are linked to market rates.

Are there any fees or charges?

The main charges on non-euro deposit accounts are for foreign exchange transactions and transferring money out of your account.

The fees and charges that apply to normal bank accounts, such as transaction charges and charges for duplicate statements, unpaid cheques and so on, will also usually be charged on non-euro deposit accounts.

Is my money safe if the bank I lodge it with goes bust?

Any money you have on deposit in a non-euro currency gets the same protection that it would if in euro. So if you have your money on deposit with an Irish bank, up to €100,000 of your savings should be protected by the State's deposit guarantee scheme.

If you have more than €100,000 in your account, your savings may be covered by the Government guarantee. This guarantee, which is due to expire on 30 June, 2011, covers AIB, Anglo Irish Bank, Bank of Ireland, EBS Building Society, ICS Building Society, Irish Life & Permanent (Permanent TSB) and Irish Nationwide Building Society.

For a full list of the banks covered by the deposit and Government guarantee, visit www.itsyourmoney.ie.

If you have your money on deposit with an international bank, you should check if your savings are covered by a deposit protection scheme.

Investec, for example, is covered by the British government guarantee, which protects savings of up to stg£50,000 -- or €50,000, whichever is higher.

Many EU countries have different levels of deposit protection. However, from December 31, savings of up to €100,000 will be protected by a European Commission guarantee should a bank go bust, regardless of which EU country you hold those savings in.

Sunday Independent

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