Dollar Bank Accounts In Dominican Republic

[Thaiquila]

This isn't Thailand related, but is a money question that might interest expats in Thailand.

I have become aware that Dominican Republic banks pay something like 11 percent returns for USDs on CDs that are as short as 90 days. Pretty incredible, of course, when compared to what even a 5 year CD would get you in the US.

These accounts (from what I can tell) are perfectly legal for Americans as long as the IRS knows about them and you report the income. I think the income may even be tax exempt for Canadians. The banks in the DR are of course NOT FDIC insured and you need to physically go there to open the accounts. (These accounts are not liable to DR tax.)

Anyone have any experience good or bad with DR banks or specific bank references. I did visit the DR a while back and credible sounding locals (including business owning immigrants from India) gave me the impression that these were at least locally considered safe investments.

Obviously, there would be more risk in a DR account than a US or European account, just as there is more risk in a Thai account (which pay little or no interest).

Anyway, I imagine at least a few people might be interested in this subject.

[paulfr]

Yes. There are quite a few corporations and individuals

who will gladly borrow your money and pay you 15-30%

in interest.

Of course, you may not get your money back.

So they better pay for 4-6 years just for you to break even.

DR is not exactly the most stable place or government around.

A fool and his money are soon .......

[Thaiquila]

Either is Thailand and lots of people on this board are putting lots of money in Thai banks to meet visa requirements, so risk isn't exactly a foreign concept to expats.

Look at the political history of Thailand regarding coups etc, and it makes the more recent DR history look remarkably stable.

I think if you think putting money in a reputable DR bank is the same risk as giving to a junky near bankrupt company, you might just be predjudiced against the DR, which might explain why they need to pay such a high rate to attract needed hard currency.

Of course, you could also be correct about the very high risk, which is why I am asking. It is certainly more risk than a T bill!

Update: Did some research and learned there was an Argentina style financial crisis in the DR in 2003. Two banks went under. However, there were also indications that the government was reimbursing investors. It is my understanding that the DR is run by the wealthy, right wing class of people there and is strongly tied to the banks, so maybe they care about the moneyed depositers more than anything. In any case, acknowledged, pretty high risk!

[johnnyk]

If it sounds too good to be true then it probably is.

Some years ago Mexican banks were paying huge interest on dollar deposits and I looked into it.

Guess what? You don't get your dollars back, you get local currency back. You turn over dollars and they return monopoly money.

Now, I am referring to Mexico so I don't know about that exemplary paragon of financial rectitude next door to Haiti.

Good luck.

[Thaiquila]

Good point about Mexico.

The dollar accounts in the DR return dollars.

They also have DR peso accounts that pay over 30 percent. The rate being so high as to protect against currency devaluation. The peso accounts are used by expats living there who live on DR pesos.

In any case, I know this is off topic, except for the fact that there are lots of European and Canadian expats in the DR and they face similar issues as farangs in Thailand.