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Offshore Banking UK To coincide with our annual deposit-takers awards, it’s worth bearing in mind a couple of factors that are non-interest-rate related before you make your choice of offshore bank or building society account. In terms of the location of offshore deposits, the Channel Islands of Jersey and Guernsey are very popular choices in the ‘sterling area’. Neither of them have in place a depositor’s protection scheme in case of a bank failure, though they do have very vigorous vetting procedures as to which institutions they allow in. On the Isle of Man a compensation arrangement gives protection of up to 75 per cent of the first £20,000 in sterling or other currencies, to depositors with building societies or banks that fail. As well as location, also consider the type of account you are thinking of opening. As the deposit takers try to attract international money, they are becoming more and more innovative in the design of their products. Until recently you would not have found more than general-purpose instant access, chequeing, fixed-term and notice accounts on offer. But now we have the following, which may or may not suit your circumstances. Be sure to know what you are getting into if you open one of these: Offshore Banking UK - Tiered Accounts c Tiered accounts - these offer better rates of interest the more money is deposited, i.e. 5 per cent for £10,000, 5.5 per cent for £50,000 and 6 per cent for £100,000. A natural enough concept, you may think, but one that was not introduced until comparatively recently. c Money market-linked accounts - these offer ever-changing rates of interest as the deposit-taker adjusts interest to the level of return it can make by placing large tranches of depositors’ money on the short-term ‘wholesale’ (institution to institution) market. Offshore Banking UK - Indexed linked Accounts c Index-linked accounts - these set a relationship between the interest they will pay and the level of another index, such as UK base rates.
c Guaranteed returns have been the flavour of the recent past, as deposit-takers guarantee to grant a certain and unchanging (relatively high) rate of interest in return for the depositor locking up his or her money for a period of time. c Multi-currency accounts have a particular appeal for those who are paid in one currency, have outgoings in another, and perhaps want to have holdings in yet another currency. As we have stressed before, don’t open one of these ‘non-standard’ accounts unless you know exactly what you are doing. We would suggest you consider first some of the consistently superior instant-access and notice accounts for sterling or dollar offshore money detailed in our awards from page 31 of this edition. 
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