Seems there is an arbitrage opportunity. Bank of America https://www.bankofamerica.com/deposits/bank-cds/cd-accounts.go 0.10% to 0.45% 28 days to 10 years State Bank of India http://www.sbiuk.com/nri/interest-rates 2.69 to 4.16% 1 to 5 years on Dollar denominated accounts 8.75% on Rupee accounts These foreign accounts return 10x - 40x that of US banks and allegedly provide a higher level of protection than FDIC. No wonder all my Indian Doctor friends went all cash.
most likely you have to be a citizen to open an account and \or have good proof of residence. i can do same thing with russian bank,but i have to go there,transfer the money. and most importantly-having ability to transfer those dollars back to US after all(which might be a very very difficult task) btw..the definition of arbitrage- ar·bi·trage The simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take... good example of arbitrage was a balance transfer game around 2005. you open a credit card account,borrow as much as you can for free(in most cases 1-2 years agreement) and buy same length CD(which at that time earned 5+% APR). i can call this an arbitrage. but just transferring money to foreign bank for a better rate-nope
Borrow as much as you can here for 3-4% and stick it there earning 8.75%. Long 10 year terms or more... fixed rates on both sides.
I can repeat this one more time-easy to say, not easy to do.and risks on our retail levels are imo substantial. come back and report your achievements. I made 30k each year for few years in interest using scheme described above.worked, until some morons starts posting about it all over the place on internet. now there is 3% balance fee for all of you geniuses think about it... if you and I can do it- why people go to bond market buying ge bonds at 1% ytm? the WS geniuses will be all over the place and create some etf based on this idea just to collect their 1-2 % fee long time ago. but they didn't. cause it's much more comlicated than you think.
Because they made it illegal for real people to partake but ok for corps. There is a huge difference in interest rates .. why would a corp bring cash back to the us ? pay taxes and deposit the cash in a bank here? They enjoy tax deferred... as in free money earning interest at absurd rates on taxes that don't become due until repatriated. Lets see... I can pay 35% to the IRS or I can hold it perpetually and earn interest on it. Any CFO that does not do the latter would get sued for stupidity and other fiduciary COA's.