Get interest on $100K by spending only $2K using FOREX rollovers?
"I'm smart enough to know that the answer to your questions is 'no'.  There is no arbitrage scenario where you can trade currencies and be guaranteed a return. If there were, the thousands of PhD's and quants at hedge funds like DEShaw and Bridgewater would have already figured it out. You're basically trying to come up with a scenario that is risk free yet yields you better than market interest rates.  Impossible. I'm not smart enough to know why, but my guess is that your statement ""I only need $2k margin"" is incorrect.  You only need $2k as capital, but you are 'borrowing' on margin the other 98k and you'll need to pay interest on that borrowed amount, every day.  You also run the risk of your investment turning sour and the trading firm requiring a higher margin." No free lunch You cannot receive risk-free interest on more money than you actually put down. The construct you are proposing is called 'Carry Trade', and will yield you the interest-difference in exchange for assuming currency risk. Negative expectation In the long run one would expect the higher-yielding currency to devalue faster, at a rate that exactly negates the difference in interest. Net profit is therefore zero in the long run. Now factor in the premium that a (forex) broker charges, and now you may expect losses the size of which depends on the leverage chosen. If there was any way that this could reliably produce a profit even without friction (i.e. roll-over, transaction costs, spread), quants would have already arbitraged it away. Intransparancy Additionaly, in my experience true long-term roll-over costs in relation to interest are a lot harder to compute than, for example, the cost of a stock transaction. This makes the whole deal very intransparant. As to the idea of artificially constructing a USD/USD pair: I regret to tell you that such a construct is not possible. For further info, see this question on Carry Trade: Why does Currency Carry Trade work? I work at a FOREX broker, and can tell you that what you want to do is NOT possible. If someone is telling you it is, they're lying. You could (in theory) make money from the SWAP (the interest you speak of is called SWAP) if you go both short and long on the same currency, but there are various reasons why this never works. Furthermore, I don't know of any brokers that are paying positive SWAP (the interest you speak of is called SWAP) on any currency right now. Now, is there any clever way to combine FOREX transactions so that you receive the US interest on $100K instead of the $2K you deposited as margin?  Yes, absolutely. But think about it -- why would the interest rates be different? Imagine you're making two loans, one for 10,000 USD and one for 10,000 CHF, and you're going to charge a different interest rate on the two loans. Why would you do that? There is really only one reason -- you would charge more interest for the currency that you think is less likely to hold its value such that the expected value of the money you are repaid is the same. In other words, currencies pay a higher interest when their value is expected to go down and currencies pay a lower interest when their value is expected to go up. So yes, you could do this. But the profits you make in interest would have to equal the expected loss you would take in the devaluation of the currency. People will only offer you these interest rates if they think the loss will exceed the profit. Unless you know better than them, you will take a loss.
"HSBC, Hang Seng, and other HK banks had a series of special savings account offers when I lived in HK a few years ago.  Some could be linked to the performance of your favorite stock or country's stock index. Interest rates were higher back then, around 6% one year.  What they were effectively doing is taking the interest you would have earned and used it to place a bet on the stock or index in question.  Technically, one way this can be done, for instance, is with call options and zero coupon bonds or notes.  But there was nothing to strategize with once the account was set up, so the investor did not need to know how it worked behind the scenes... Looking at the deposit plus offering in particular, this one looks a little more dangerous than what I describe.  See, now we are in an economy of low almost zero interest rates.  So to boost the offered rate the bank is offering you an account where you guarantee the AUD/HKD rate for the bank in exchange for some extra interest.  Effectively they sell AUD options (or want to cover their own AUD exposures) and you get some of that as extra interest.  Problem is, if the AUD declines, then you lose money because the savings and interest will be converted to AUD at a contractual rate that you are agreeing to now when you take the deposit plus account.  This risk of loss is also mentioned in the fine print. I wouldn't recommend this especially if the risks are not clear. If you read the fine print, you may determine you are better off with a multicurrency account, where you can change your HK$ into any currency you like and earn interest in that currency. None of these were ""leveraged"" forex accounts where you can bet on tiny fluctuations in currencies.  Tiny being like 1% or 2% moves.  Generally you should beware anything offering 50:1 or more leverage as a way to possibly lose all of your money quickly. Since you mentioned being a US citizen, you should learn about IRS form TD F 90-22.1 (which must be filed yearly if you have over $10,000 in foreign accounts) and google a little about the ""foreign account tax compliance act"", which shows a shift of the government towards more strict oversight of foreign accounts." The location does matter in the case where you introduce currency risk; by leaving you US savings in USD, you're basically working on the assumption that the USD will not lose value against the EUR - if it does and you live in the EUR-zone, you've just misplaced some of your capital. Of course that also works the other way around if the USD appreciates against the EUR, you gained some money. "My visa would put the goods on the current monthly balance which is no-interest, but the cash part becomes part of the immediate interest-bearing sum. There is no option for getting cash without paying immediate interest, except perhaps for buying something then immediately returning it, but most merchants will do a refund to the card instead of cash in hand. This is in New Zealand, other regions may have different rules. Also, if I use the ""cheque"" or ""savings"" options at the eftpos machine instead of the ""credit"" option, then I can have cash immediately, withdrawn from my account, with no interest charge.  However the account has to have sufficient balance to do so." An offset account is simply a savings account which is linked to a loan account. Instead of earning interest in the savings account and thus having to pay tax on the interest earned, it reduces the amount of interest you have to pay on the loan. Example of a 100% offset account: Loan Amount $100,000, Offset Balance $20,000; you pay interest on the loan based on an effective $80,000 loan balance. Example of a 50% offset account: Loan Account $100,000, Offset Balance $20,000; you pay interest on the loan based on an effective $90,000 loan balance. The benefit of an offset account is that you can put all your income into it and use it to pay all your expenses. The more the funds in the offset account build up the less interest you will pay on your loan. You are much better off having the offset account linked to the larger loan because once your funds in the offset increase over $50,000 you will not receive any further benefit if it is linked to the smaller loan. So by offsetting the larger loan you will end up saving the most money. Also, something extra to think about, if you are paying interest only your loan balance will not change over the interest only period and your interest payments will get smaller and smaller as your offset account grows. On the other hand, if you are paying principal and interest then your loan balance will reduce much faster as your offset account increases. This is because with principal and interest you have a minimum amount to pay each month (made up of a portion of principal and a portion of interest). As the offset account grows you will be paying less interest, so a larger portion of the principal is paid off each month. "As previously answered, the solution is margin. It works like this: You deposit e.g. 1'000 USD at your trading company. They give you a margin of e.g. 1:100, so you are allowed to trade with 100'000 USD.  Let's say you buy 5'000 pieces of a stock at $20 USD (fully using your 100'000 limit), and the price changes to $20.50 . Your profit is 5000* $0.50 = $2'500. Fast money? If you are lucky. Let's say before the price went up to 20.50, it had a slight dip down to $19.80. Your loss was 5000* $0.2 = 1'000$. Wait! You had just 1000 to begin with: You'll find an email saying ""margin call"" or ""termination notice"": Your shares have been sold at $19.80 and you are out of business. The broker willingly gives you this credit, since he can be sure he won't loose a cent. Of course you pay interest for the money you are trading with, but it's only for minutes. So to answer your question: You don't care when you have ""your money"" back, the trading company will always be there to give you more as long as you have deposit left. (I thought no one should get margin explained without the warning why it is a horrible idea to full use the ridiculous high margins some broker offer. 1:10 might or might not be fine, but 1:100 is harakiri.)" Have you tried calling a Forex broker and asking them if you can take  delivery on currency? Their spreads are likely to be much lower than  banks/ATMs. "What about the escudo balance in my checking account in Cabo Verde?   Are the escudos that I held for months or years, before eventually   deciding to change to dollars, considered an investment? Don't know. You tell us. Investment defined as an activity taken to produce income. Did you put the money in the checking account with a full expectation of profits to be made from that? Or you only decided that it is an investment in retrospective, after the result is known, because it provides you more tax benefit? To me it sounds like you have two operating currencies and you're converting between them. Doesn't sound like an investment. Generally, from my experience, bank accounts are not considered investments (even savings accounts aren't). Once you deposit into a CD or bond or money market - you get a cash-equivalent which can be treated as an investment. But that's my personal understanding, if there are large amounts involved, I'd suggest talking to a US-licensed CPA/EA specializing on expats in your area. Pub 54 is really a reference for only the most trivial of the questions an expat may have. It doesn't even begin to describe the complexity of the monstrosity that is called ""The US Tax Code for Expats and Foreigners""." Technically, yes, you can do this. It's a form of arbitrage: you're taking advantage of a small price difference between two markets. But is it worth the hassle of keeping on top of the overdraft and making sure you don't incur any accidental penalties or fees? Interest rates are super low, and floating £1000 or £2000, you're only going to generate £10-20 per year in a basic savings account. You would need to check with Bank as it varies from Bank to Bank.  You can break the FD's. Generally you don't loose the interest you have earned for 1 years, however the rate of interest will be reduced. i.e. if the rate was 7% for 1 year FD and 8% for 2 years FD, when you break after a year you will get only 7%. Generally this can happen in few hours but definitely in 2 days. You can get a Loan against FD's. Generally the rate of interest is 2% higher than FD rate. There is also initial processing fee, etc. Check with the Bank, it may take few days to set things up. I won't make any assumptions about the source of the money.  Typically however, this can be an emotional time and the most important thing to do is not act rashly. If this is an amount of money you have never seen before, getting advice from a fee only financial adviser would be my second step.  The first step is to breathe and promise yourself you will NOT make any decisions about this money in the short term.  Better to have $100K in the bank earning nearly zero interest than to spend it in the wrong way. If you have to receive the money before you can meet with an adviser, then just open a new savings account at your bank (or credit union) and put the money in there.  It will be safe and sound. Visit http://www.napfa.org/ and interview at least three advisers. With their guidance, think about what your goals are.  Do you want to invest and grow the money?  Pay off debt?  Own a home or new large purchase?  These are personal decisions, but the adviser might help you think of goals you didn't imagine Create a plan and execute it. You can use Norbet's Gambit to convert between USD and CAD either direction. I have never personally done this, but I am planning to convert some CAD to USD soon, so I can invest in USD index funds without paying the typical 2% conversion fee.  You must be okay with waiting a few days for the trades to settle, and okay with the fact that the exchange rate will almost certainly change before you sell the shares in the opposite currency. The spread on DLR.TO is about 0.01% - 0.02%, and you also have brokerage commissions and fees. If you use a discount broker the commissions and fees can be quite low. EG. To transfer $5000 USD to CAD using Questrade, you would deposit the USD into a Questrade account and then purchase ~500 units of DLR.U.TO , since it is an ETF there is no commission on the purchase. Then you request that they journal the shares over to DLR.TO and you sell them in CAD (will have about a $5 fee in CAD, and lose about $1 on the spread) and withdraw. The whole thing will have cost you $6 CAD, in lieu of ~$100 you would pay if you did a straightforward conversion with a 2% exchange fee. The difference in fees scales up as the amount you transfer increases. Someone has posted the chat log from when they requested their shares be journaled from DLR.TO to DLR.U.TO here. It looks like it was quite straightforward. Of course there is a time-cost, and the nuisance of signing up for an maintaining an account with a broker if you don't have one already. You can do it on non discount-brokers, but it will only be worth it to do it with a larger amount of money, since the commissions are larger. Note: If you have enough room to hold the CAD amount in your TFSA and will still have that much room at the end of the calendar year, I recommend doing the exchange in a TFSA account. The taxes are minimal unless the exchange rate changes drastically while your trades are settling (from capital gains or losses while waiting a few days for the trades to settle), but they are annoying to calculate, if you do it often. Warning if you do it in a TFSA be sure not to over contribute. Every time you deposit counts as a contribution and your withdrawals don't count against the limit until the next calendar year. Depends on the countries and their rules about moving money across the border,  but in this case that appears entirely reasonable. Of course it would be a gamble unless you can predict the future values of currency better than most folks; there is no guarantee that the exchange rate will move in any particular direction. I have no idea whether any tax is due on profit from currency arbitrage. "As is so often the case, there is an asterisk next to that 2.5% interest offer.  It leads you to a footnote which says: Savings Interest Rate Offer of 2.5% is available between January 1, 2015 and March 31, 2015 on all net new deposits made between January 1, 2015 and March 31, 2015 to a maximum of $250,000.00 per Account registration. You only earn 2.5% interest on deposits made during those three months.  Also, on the full offer info page, it says: During the Offer Period, the Bank will calculate Additional Interest on eligible net new deposits and: All interest payments are ineligible for the purposes of calculating Additional Interest and will not be calculated for the purposes of determining eligible daily balances. In other words, any interest paid into an Applicable Account, including Additional Interest, will not be treated as a new deposit for subsequently calculating Additional Interest payments. I couldn't totally parse out all the details of the offer from their legalese, but what it sounds like is you will earn 2.5% interest on money that you deposit into the account during those three months.  Any interest you accrue during that time will not count as a deposit in this sense, and so will not earn 2.5% compounded returns.  The ""During the Offer Period"" qualification also makes it sound like this extra interest will only be paid during the three months (presumably at a 2.5% annualized rate, but I can't see where it actually says this). So essentially you are getting a one-time bonus for making deposits during a specific three-month period.  The account doesn't really earn 2.5% interest in the normal sense.  The long-term interest rate will be what it normally is for their savings accounts, which this page says is 1.05%." You shouldn't be charged interest, unless possibly because your purchases involve a currency conversion. I've made normal purchases that happened to involve changes in currency.  The prices were quoted in US$ to me.  On the tail end, though, the currency change was treated as a cash advance, which accrues interest immediately. You can check the website for the company that manages the fund. For example, take the iShares Nasdaq Biotechnology ETF (IBB). iShares publishes the complete list of the fund's holdings on their website. This information isn't always easy to find or available, but it's a place to start. For some index funds, you should just be able to look up the index the fund is trying to match. This won't be perfect (take Vanguard's S&P 500 ETF (VOO); the fund holds 503 stocks, while the S&P 500 index is comprised of exactly 500), but once again, it's a place to start. A few more points to keep in mind. Remember that many ETF's, including equity ETF's, will hold a small portion of their assets in cash or cash-equivalent instruments to assist with rebalancing. For index funds, this may not be reflected in the index itself, and it may not show up in the list of holdings. VOO is an example of this. However, that information is usually available in the fund's prospectus or the fund's site. Also, I doubt that many stock ETF's, at least index funds, change their asset allocations all that frequently. The amounts may change slightly, but depending on the size of their holdings in a given stock, it's unlikely that the fund's manager would drop it entirely.