Comparing Bank Rates Foreign and US

[PocketChange]

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.

 

[Bob111]

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

 

[PocketChange]

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.

Quote from Bob111:

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

 

[Bob111]

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.

 

[PocketChange]

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.