Uk Interest Rates

[uhhello]

Figured I'd throw this out there since nobody I know can answer it. Why are the UK banks offer such high interest rates with very few restrictions. My friends account has a 1000 gbp minimum but gathers 8-9% monthly with no fee and the only restriction is that if you make any withdraws for that month you accrue 0 interest for that month. Best stateside rate I can find is 3.2% with ING. Can someone help me out here.

[Butters]

Figured I'd throw this out there since nobody I know can answer it. Why are the UK banks offer such high interest rates with very few restrictions. My friends account has a 1000 gbp minimum but gathers 8-9% monthly with no fee and the only restriction is that if you make any withdraws for that month you accrue 0 interest for that month. Best stateside rate I can find is 3.2% with ING. Can someone help me out here.

The additional interest your friend gets is paid for by EADS, with the money they steal from America and Boeing!

[Guest Grey]

I know little to nothing about economics, but...

Value of the dollar < Value of the pound therefore better interest rates?

More likely... they probably have higher interest rates for loans, so people get more interest on their savings.

I'm probably 90% wrong.

[Skitzo]

What role would taxes play on interest rate? If taxes are more over in GB would that not make money more "scarce" and therefore drive up interest rates?

[MilitaryToFinance]

Figured I'd throw this out there since nobody I know can answer it. Why are the UK banks offer such high interest rates with very few restrictions. My friends account has a 1000 gbp minimum but gathers 8-9% monthly with no fee and the only restriction is that if you make any withdraws for that month you accrue 0 interest for that month. Best stateside rate I can find is 3.2% with ING. Can someone help me out here.

I think you meant 8-9% annually. The Fed Funds target rate is currently at 2.0% here because the Fed is trying to bail out the banks instead of worrying about inflation. The UK equivalent, The Central Bank of the UK, has their target rate currently at 5%. Thus, as Grey said, higher interest rates on savings as well as on loans. This is an overly simplistic explanation but one of the main reasons.

[uhhello]

I think you meant 8-9% annually. The Fed Funds target rate is currently at 2.0% here because the Fed is trying to bail out the banks instead of worrying about inflation. The UK equivalent, The Central Bank of the UK, has their target rate currently at 5%. Thus, as Grey said, higher interest rates on savings as well as on loans. This is an overly simplistic explanation but one of the main reasons.

Yes I did mean annually :) Thanks for the replies.