[EN] Narrow Escape from Iceland

Posted on October 8, 2008
Filed Under English

I could easily have been one of tens of thousands of Dutch people and one of hundreds of thousands of Brits to stare at a non-functioning IceSave website today.

Like most people, I have some savings tucked away as a financial buffer. Interest rates are quite low, so there isn’t much accumulation going on. My bank gives me about 3.5%, but with some restrictions in place that usually shave a few percentage points off of the amount of interest I could have had.

So I’ve been studying alternative approaches for a while now. Stocks and bonds are not an option [sic] for me. I don’t like to have my money riding a wave of irrational behaviour like “trust” and “hope”, which is what basically drives the economy and the stock markets. To me, savings and mortgages are not surfing boards.

I’m also not very keen on locking my money away for months or even years to attain a higher rate of interest. I want to be able to get to my money at any point in time. And then there was the influx of ‘Internet savings accounts’, as offered by banks like Landsbanki from Iceland, with its IceSave subsidiary. IceSave got good reviews in the UK market, their interest rate was 5.25%, so … I decided to give it a go.

So I opened an account over the Internet last week, made a first deposit of 100 euro to activate the account, and waited for the paperwork to arrive, which would give me full access to my account. The IceSave website urged me to ‘start saving and accumulating interest right away’, but as a fool and his money are soon parted, I decided not to put all of my savings into a savings account to which I didn’t even have full access yet.

Anyway, a few days passed, and nothing arrived in the mail. And then the shit hit the fan, and all of Iceland just sank into the ocean. I’m not worried about those 100 euros. If I don’t get them back, or if getting them back takes extraordinary amounts of hassle, I will just let it go, and file it under ‘lessons learned’.

But imagine what would have happened had that paperwork arrived on Friday or Saturday .. I would probably have put all of my savings into an imploding geyser. On the other hand, shopping around for higher interest rates has made me more interested in financial news, so I was already aware of problems with the Icelandic banks in particular, and the Icelandic economy in general. I guess I would’ve pulled the money out before all assets were frozen, as they are now.

The other two ‘high interest players’ are not an option right now. One of them was almost bought by another Icelandic bank earlier this year, which would have made it go under as well, because that Icelandic bank went bust earlier this month.

All in all, I will probably settle for a little less interest for a while. My current bank was nationalised a few days ago, which, oddly enough, makes it one of the safest bets on the market today, where it was all but bankrupt last week.

I guess I lost interest for now.


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