Guide to Essential Money Tools

Savings Tools

Take your money to the market

The offshore money market may offer savers the best rate. Here’s how you can get a piece of the action.

Money market accounts offer a fixed rate of interest for a defined period of time. The critical difference between a money market account and a normal deposit account is that you must specify this time frame exactly, for example seven days, one month, three, six, or 12 months. It is important to note that once you have set your deposit time frame, it cannot be altered (in exceptional circumstances it can, but at a relatively high cost). When a money market account term ends, interest is paid and the deposit may then be withdrawn in whole or in part or re-deposited for a further period at a newly negotiated interest rate and on new terms.

A key difference between a normal deposit account and a money market account is that as a general rule with the former, savers can bank on the precept, ‘the longer you tie up your money, the higher the rate of interest’. This does not apply to the money markets.  The laws of market demand, and market expectations, as well as economic conditions both local and worldwide are the major factors in determining money market interest rates. In particular, the actions of central banks will have a significant impact upon the interest rates being offered.
On approaching a bank for a money market account, be prepared to state the precise amount of money you want to deposit and the precise time period for which you want to invest your money – you can specify either a date or a number of days or months. You will then be given what’s called an indication rate, which is an indication of the rate you could achieve at that time in the money market.

Unless you accept that rate there and then and complete the account opening process at the same time, this rate may not actually be the one that you end up with. If you decide to open the account later that day, you may find that the rates have moved and you will be offered a new rate for your placement.
In other ways, opening a money market account is similar to opening a normal deposit account. Savers are required to complete application forms, and provide the necessary documents to meet identification requirements and to have read the terms and conditions applying to the account.

Payments into and out of a money market account will normally be made by electronic funds transfers, although cheques are usually acceptable – however, it is essential to check the amount of time your bank may need to clear cheque funds.

Offshore money market account providers:

Abbey International
Anglo Irish Bank (IOM)
Bank of Scotland International
Bradford & Bingley International
Bristol & West International
Fairbairn Private Bank
First Active Bank (CI)
HSBC Bank International
Investec Bank (CI)
Irish Permanent International
Lloyds TSB Offshore
NatWest International
Royal Bank of Canada (CI)
Kaupthing Singer & Friedlander (IOM)
Standard Bank Offshore
Woolwich Guernsey