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By Kate Hobbs
When most people think about offshore banking, they think about the wealthiest people in the world or the world of spies and international crime! For years, these banks have mostly been associated with the super wealthy or criminals who are trying to hide their money. But the truth is that offshore banking is something that is perfectly legal – in fact, a lot of ordinary people do it, as well. In very basic terms, offshore banking simply refers to the practice of opening a bank account outside of your native country. Why do people do it? Mainly because of the tax benefits but there are other advantages to these accounts, as well. There are also a few disadvantages to these accounts.
A World Of Benefits
The Bahamas, along with places like Austria and the Cayman Islands are among the top places for offshore accounts. Apart from the tax breaks, people may opt for offshore accounts in the Bahamas for a number of other reasons. For one thing, these accounts offer the depositor greater privacy, thanks to the Swiss Banking Act of 1934. If the depositor lives in a politically or economically unstable country, storing money in offshore accounts can be a real life-saver. If for any reason they need to flee their homes to another country, they will still have their money safe in the bank. Unstable countries may also resort to freezing bank accounts and offshore accounts bypasses that risk.
When compared to interest rates in your home country, chances are that you will get better rates with an offshore account. This is because most offshore banks have much lower overheads and no government intervention – hence they can offer higher interest rates to their clients. Apart from this, offshore accounts entitle the depositor to a number of services they may not be able to get with a domestic bank. This includes better loan rates and the ability to keep your banking details anonymous.
Offshore bank accounts in the Bahamas do have their drawbacks, however. For instance, actual physical contact is reduced to an absolute minimum. Thanks to the internet and other global technology, you can easily run your account via phone or email. However, it can be hard to access information immediately – many offshore banks are working on ways to minimize this problem.
Given the world of benefits that these offshore accounts give you, it’s only natural that they be on the expensive side. Opening up an offshore account and maintaining it costs considerably more than keeping an ordinary domestic account. Apart from that, there is still a stigma attached to offshore banking. It’s true that in the past, these banks have been used by the mafia and illegal organizations. There have also been recent concerns that offshore banks have been holding money for different terrorist outfits. Offshore accounts are perfectly legal and are used by numerous well-respected dignitaries from all around the world.
If you have the funds to open and maintain an offshore account, there’s no reason why you shouldn’t! While it might be expensive, the tax benefits and other perks certainly make such an account worth the effort!
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