What are you saving for? Do you have a reliable savings system in place?
If you are interested in putting money away in the UK, but you are a non-resident, you might find that you need to look a little harder to find the best savings system for you. But with banks and many other financial institutions looking to meet the financial needs of expats international students and all other non-residents, you will soon find that there are many options that you could try. The only catch, especially in the competitive financial market, would be finding the savings account and system that suits your needs in the best ways.
Banks like HSBC, one of the leading expat banks in the UK, offer some interesting packages in their expat account packages, and it’s good to know that you will never miss something that works for you.
Before we look at some of the best savings accounts in the UK for non-residents and expats, let’s look at some of the things you need to do and consider before you create a savings account.
Understand what a savings account is – while there are numerous savings accounts that you could choose from, it’s important for you to remember that a savings account refers to the type of account in which you deposit your money, hopefully, to earn an interest, but most importantly, to ensure that you have money saved up for emergencies, education, or even a holiday. This account, unlike the current accounts, will make your saved up cash inaccessible to you for a few months and in other cases, even up to a year. What is means is that if you have a savings account, then you are putting away your money in a place that you cannot access easily. So, if you find yourself constantly indulging and shopping impulsively, a savings account could be exactly what you need to attain some level of financial discipline.
On the same note, it’s important to note that some savings accounts that restrict your access to your money will have a fixed interest rate that’s applicable throughout the agreed fixed period. Generally, these fixed savings accounts have significantly better interest rates than the access savings accounts, which tend to feature variable or low-interest rates.
What do you need to check when looking for the best savings account?
What is your financial situation, and what are you saving for? Essentially, your savings goal shouldn’t be a long term thing, which means that you can save for some months or 2 years.
Interest Rates – generally, the interest rates in the financial scene change depending on different external factors, which means that you must have an idea about what the current rates are before you start shopping for the banks that offer the best savings packages.
Penalties and fees – If you save your money in a fixed savings account, you must be aware of charges and penalties applicable, especially if you choose to get your money out before the end of the fixed deal. You also need to set reminders to ensure that your account information is in order or that you won’t miss some benefits.
Holding more than one savings account – it is possible to have more than one savings account, meaning that if you wish to lock away money for different things in different accounts, you can do so easily. Just beware of the features of your savings accounts.
Restrictions on the number of withdrawals one can make – if you don’t opt for the fixed-savings accounts, the next-best account you settle for might have limits to the number of withdrawals you are allowed to make. You may only be allowed to withdraw your money a few times within a year or a quarter.
Minimum Deposit – whether you are a UK resident or not, most, if not all, savings accounts have minimum deposit requirements for the savings accounts. Some banks have minimum savings requirements, which are as high as £1,000, while other accounts’ minimum requirements could be as low as £1. With these limits in the minimum amount of money that you can put in your account, banks ensure that you don’t miss out on deals or good interest rates. Since banks have a different limit, look out for the deposit minimums that work best for you.
Bonus rates and offers – some of the banks and financial institutions that offer savings accounts offers and introductory bonus offers which are designed to after the first year of your savings. What this means is that you could find great savings options if you are patient in your search for the best accounts to save your money in.
Risk Levels – While savings accounts/options like the cash ISAs and the fixed-rate bonds boast being risk-free (virtually), if you save with the shares and stocks ISAs or the more innovative finance ISA, you should be ready to deal with higher risk levels since there are different factors in the stock markets that affect the interest rates or the expected returns form the shares and stocks ISAs. So, if you choose to save with the riskier products, you must be ready and willing to lose some money. The alternative to all this is waiting significantly longer to enjoy the returns from your investment thanks to the power of compounding interest.
Interest payable at different frequencies (for different accounts) – while some savings accounts pay out interest monthly, others will pay interest quarterly, and others will do that annually. So, if you need the interest earned to take care of different things, you might want to check the friendliness of the interest payout frequency.
FSCS Protection – there is a limit to how much of your savings will be protected by the FSCS (Financial Services Compensation Scheme). To be specific, only 96% of the savings in the UK will have the protection of the FSCS, meaning that if the bank goes bust, they will only reimburse 96% of your savings. So, look for stable banks and also make sure that the bank is FSCS-authorised.
Savings and Taxes – The amount of money you save that goes un-taxed depends on your income tax rate.
Types of savings accounts
There are fixed-rate savings accounts (also called fixed-rate bonds), and these offer a fixed interest rate at 1% or 2% for money saved up for a specific duration.
Easy-access accounts – these savings accounts have lower interest rates.
Regular savings accounts – the interest rates from these accounts are quite competitive, but the catch is that the high-interest is available only for a fixed period.
ISAs – ISAs allow you to save money, tax-free. There are ISA allowances offered to adults – currently £20,000 annually for adults and £4,368 for children.
Which are the best savings accounts for non-UK residents?
HSBC Savings and Saver Accounts
HSBC is one of the best savings accounts offered to non-UK residents. HSBC offers a huge range of banking products and services to its clients, but the best bit has to be the fact that HSBC has curated a great range of products designed to match the needs of non-UK residents who wish to save.
On top of all the products and services offered, HSBC makes it to the top of our list because it is an award-winning bank that deals in expat services. And speaking of services, this bank has some of the best relationship managers who will help you to manage your finances with ease. They also have wealth managers, and their digital banking services offer everything you need to ensure access to your money and different services on your smartphone or any other mobile device.
Regarding savings, this bank gives you instant access to savings accounts, and you might also choose their fixed-term savings accounts that are accessible in 19 currencies.
HSBC offers two types of savings accounts: easy access savings (also current savings) and the saver account.
Easy Access Savings Account
The easy-access savings account has no fixed-term to the savings period, and you can access your account/ savings at any time. This account also allows expats to choose between any of the 16 global currencies meaning that you can save in any preferred currency. The interest rates applicable are relatively low.
New HSBC expats need to put in a minimum of GBP 50,000 or a currency equivalent, and you have to maintain a minimum account balance of GBP 10,000.
HSBC Saver Account
The saver account is the other savings account available to non-UK residents. You can save in any of the top 16 global currencies, and the minimum acceptable amount you can keep in this savings account is £5,000.
The interest rates for the saver account will be calculated monthly then paid to your account monthly. But no interest will be payable if your savings account balance falls below the set minimum account opening balance. The interest rates are variable too.
Offshore Savings Account
Offshore savings accounts are also available to non-UK residents, although they are not based in the UK, these accounts offer great saving opportunities for expats and non-residents, as well as UK residents. The interest rates to these accounts are variable but generally higher than the interest rates offered by the local banks.
Offshore accounts, in case you are unsure, refer to the savings account based outside the UK. In most cases, people who save money overseas do that to avoid taxes, but the good news is that saving your money overseas is nothing illegal. Today, you will find a number of UK-based banks or building societies building up offshore arms. Lloyd bank and Skipton International are examples of UK banks with international savings accounts.
To save up in an offshore savings account, you’d need about £10,000 to open the account. Regarding taxes, you’d still be liable to pay taxes if you have an overseas savings account, as long as you are liable to pay taxes in the UK.
Things you should know before you open an offshore savings account
Most offshore accounts come with numerous restrictions for account opening, especially when dealing with the first deposit.
You have to provide proof of address and your identity when opening an account, and if you are dealing with a private bank and in search of a high-deposit account, the bank will ask for information about your financial position and also proof of income.
An offshore account is recommended if you travel frequently or if you are a business professional.
Some providers charge hefty withdrawal fees
Money held in offshore savings accounts and financial institutions are not covered by the UK FSCS, which means that if the institution you are saving with goes bust, you could lose all your money if the country the offshore account is based doesn’t have compensation or a guarantee scheme.
The top countries that offshore accounts are based include Jersey, Gibraltar, Guernsey, France, The Netherlands, and the Isle of Man.
High-Interest Savings Accounts
- Marcus Account by Goldman Sachs
If you are interested in saving money in a high-interest savings account, the Marcus account offered by Goldman Sachs would be worth a look. Currently, the interest rate offered for this savings account is 1.5%, and it includes and a 12-month bonus on interest at 0.15%. Besides the attractive rates, you can open this account online easily, and you also get to make as many withdrawals as possible without any penalties.
- Virgin Money Regular Saver
Virgin Money offers an impressive interest rate of 3% for its savings account, and the best bit is that your money isn’t locked away for a specific amount of time, and you can access your money at any time.
The only limits to the account include the fact that you are only allowed to save between £1 and £250 each month. Also, you must visit the branch to open an account.
The other banks offering savings accounts for expats and other non-UK residents include Barclays Bank, Lloyds Bank, Metro Bank, NatWest Bank, and Standard Bank.