News Create time deposit abroad: balance opportunities and risks well News always well informed 

monday, 27.06.16 , written by Bernd Lauberg Well interest-bearing fixed-term accounts only mean an interest rate of just over one percent for savers. But even such conditions increasingly offer only foreign banks. Many investors are wondering how safe it is to invest money abroad. Stiftung Warentest tries to give answers. >

Festgeld im Ausland anlegen Create time deposit abroad: More return with less security

They are called Close Brothers, Crédit Agricole Consumer Finance, Klarna, Sberbank Direct or Yapi Kredi Bank – financial institutions in which investors can park their savings on a time deposit account and secure interest rates of more than one percent for a term of one year. But the comparatively good conditions have a catch : the time deposit is invested abroad. For some banks Stiftung Warentest has concerns, however, whether savers get their money back up to a maximum of 100,000 euros, should the bank go bankrupt . Therefore, the deposit abroad should be treated with caution, especially when the offers are conveyed via Zinsportale.

Fixed term abroad: money saved by savers in an emergency?

Within the European Union, the savings of investors are protected by the so-called deposit insurance in the event of insolvency of a bank. In each case, savers receive a maximum of 100,000 euros in case of bankruptcy. If the financial institutions can not afford the sum, according to Stiftung Warentest (test-Issue 7/2016) jumps in the state. However, as there are some countries in the EU whose financial strength has not received top marks from various rating agencies, consumer advocates do not trust national guarantee schemes equally. They recommend “no interest rates from EU countries without top rating for their economic power.” These currently include:

  • Southern Europe : Banco BNI Europe, Banco Privado Atlântico, Novo Banco (all three Portugal), Ferratum Bank, Firmbank (both Malta), Banca Farmafactoring, Banca Sistema, IW Bank, South Tyrol Savings Bank (all four Italy)
  • Western Europe : AIB (Ireland)
  • Central Europe : Bigbank (Estonia), Banca Kovanica, Kent Bank, Podravska Banka, Vaba Banka (all four Croatia), AS Private Bank (Latvia), Alior Bank (Poland), Postova Banka (Slovakia), J & T Banka (Czech Republic)
  • Southeastern Europe : Bulgarian-American Credit Bank, Fibank (both Bulgaria), Piraeus Bank (Greece)
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Fixed term abroad: avoid pitfalls

Even in states with a very good credit rating, investors should take a close look at the terms and conditions. For example, the British banks FirstSave Euro and Close Brothers only offer a deposit guarantee of 75,000 pounds – the equivalent of 96,000 euros. “Savers should invest significantly less with these banks because of the exchange rate risk and leave a risk buffer”, so the recommendation of Stiftung Warentest. In addition, it is advisable to look after the Brexit decision, the British offers exactly.

With a term of three years, Close Brothers together with Klarna is one of the best time deposit providers (1.40 percent return). Those who want to invest their money for a year , currently find the best conditions:

  • FirstSave Euro – 1.25 percent
  • Klarna – 1.20 percent
  • Nordax Bank – 1.10 percent

Service: With the fixed deposit account comparison computer, you can quickly find out which banks still offer you an acceptable interest rate in times of low interest rates.

Examine interest rate portals for arranging foreign time deposit accounts

For a time deposit account abroad, savers often have to reside there, which is not the case with most investors. Interest rate portals continue to help here . However, as a rule, these also convey offers from countries with uncertain financial strength. In addition, the magazine Finanztest (Issue 9/2015), which belongs to Stiftung Warentest, warns of pitfalls . For example, some banks brokered through the platforms are not supposed to pay compound interest for multi-year fixed-term deposits. If, in the case of a multi-year investment, the total interest is only paid out at the end of the term, this sum threatens to override the saver’s lump sum. Savers then have to pay taxes to the tax office.

Tip: Get detailed advice on investment opportunities to avoid pitfalls. Find out with a non-binding investment offer which other options you have for investing your money in a highly profitable way.

  • Here are tips and more information about the investment. >
  • Bernd Lauberg
  • editorial staff

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