Here at Q Wealth, we often receive emails and calls from people who are confused about managing their finances as soon as they become expatriates or non-residents. I am not talking so much about tax preparation or tax returns, but about the practical aspects of cross-border banking.
For example: Do you need a bank account abroad? What is the difference between a multi-currency account and multiple currency accounts? Do I have to keep my money in the country I live in? Can I still access my online brokerage account from abroad? These are all typical questions asked, and I will answer those and more in this article.
Let's put together two typical complex characters, Bill and Mary Expat, who go overseas early and plan to travel frequently. To make things easier, let's say they're American. They decided they liked Latin America's laid-back lifestyle, but they still alternate between retirement and one of the trays The more popular expatriates like San Miguel de Allende in Mexico, or Bucas del Toro in Panama … or maybe they would have liked to go to a more exotic, more advanced place like Colombia or Brazil. They still don't know. And Bill and Mary are determined to enjoy the journey.
Bank accounts and ATM withdrawals
Bill and Mary begin their journey with several bank accounts in their home state, U.S.A. Like most couples, they have a pair of joint checking accounts, a savings account, a credit consolidation account, and some credit cards.
It is definitely worth keeping these accounts of the home countries. US protests are still useful in many Latin American countries, where they can be redeemed in the friendly neighborhood Casa de Cambio. This is a good way to access cash for things like daily living expenses or home improvement. Typically, the casas de cambio provides a better exchange rate than ATM machines without charging fees and without subject to daily restrictions. But of course before they send you a check instead, they must know you. It is best to refer to an existing client, so ask around "Exile Experts" in your chosen area.
American bank accounts will also help with home account payments. Fixed bills like insurance payments can be automatically charged, while one-time bills may be best paid by mail. Ordinary revenue like Social Security checks can be deposited directly into the U.S. checking account.
Many people do not even know that they have cash withdrawals or daily spending limits at the ATM or their credit cards until the day they urgently need fairly large money. Afraid of building up a large amount of cash at home, they wait until the last minute to withdraw money, assuming that because they have the money in their account, they can withdraw it through their debit cards.
A big mistake! They have to pay their builders cash and the cash facility refuses to spit the money. In addition, many countries have only one or two ATM networks and these networks automatically impose their daily limits.
It is important to understand from this perspective that there are actually three different types of daily limitations that you must face:
o The daily cash withdrawal limit imposed by the bank issuing the card
o Daily purchase limit imposed by the card issuing bank – this applies to non-cash purchases where you sign a card purchase voucher at a retailer.
o Daily cash withdrawal limit imposed by the ATM network owner – This limit is not set by your bank, but by the owner of the actual cash machine in which you make the transaction.
That is, you can ask the bank that issues your card to permanently or temporarily increase your cash withdrawal limit. They might set that at $ 50,000 a day. But most ATMs don't pay more than $ 500 in a single transaction. In this case, as far as your ticket issuer is concerned, you can make 100 transactions of $ 500 each day before you can reach their limit.
ATM owners have their own boundaries, for a variety of reasons. In Brazil, for example, things are particularly difficult. The nightly retreats are limited to 50 rials, while a taxi across Sao Paulo can easily cost 150 rials. So if you come to Sao Paulo on a red-eye flight, make sure to bring cash and don't rely on local ATM networks! Argentina and other countries place similar restrictions on ATM withdrawals.
In some countries every other network bank. In other countries (Spain for example) you may find one monopoly network that controls almost all cash machines. They are the worst! If the network owner says no one is allowed to withdraw more than say $ 500, their word is the law. No matter the ticket issuer allows you to withdraw $ 50,000. You get $ 500 a day, no more!
Internet purchases and credit cards
As you embark on a new country without established credit registration, and as a new arrival resident, you may find it difficult to obtain a credit card. So you should also keep credit cards from your home country. But there are some tips and tricks for playing cards correctly.
First, notify your ticket issuer that you will be traveling. Call them in advance. This is important because nowadays, all overseas transactions look suspiciously by automated tracking software used by all banks. If your bank does not know you are overseas, the software will likely stop you from spending $ 500 in Panama. Of course it would be quite embarrassing if you just leave a restaurant with potential business partners in Panama midnight, early in the morning when your bank is closed, and you trust the card to pay the bill.
You may also want to keep a US billing address. This can be a mailbox or a private mailbox address provided by a garment like a UPS or Pakmail store. You can get a phone number that goes with a VOIP provider like Skype. This is important. Be happy to send statements to a foreign address, about 99% of online retailers are not set up to handle US cards with non-US billing addresses. Their systems will automatically detect the number of cards the card is issued in the United States, and the same system will require AVS AVS only works with US addresses, so if you have a US-issued card with a non-US billing address It's useless for Internet purchases, and for other purchases that your targeting is requested for (some US gas stations, for example)
By the same token, you should be aware that the unique IP address of each computer on the Internet allows the business to see from which country the order is located. If you order something popular with card fraudsters (like a new laptop, digital camera or gold jewelry) using an American card, a US billing address but a Panama IP address, the deal is likely to be presented as a potential fraud. Usually in these cases, you need to pick up the phone and talk directly to the dealer to explain the circumstances so that they can manually bypass their fraudulent practices. Most traders will be happy to do so, but some have simply gained momentum.
Opening a local bank account
At some point you will probably find that you have to deal with the local banking system in the country you are moving to. For example, in most Latin American countries you can now pay your service bills online rather than queuing for 45 minutes to pay cash. But you will need a local bank account to do so.
Bank account opening procedures vary greatly from country to country. Unless you move to a known tax haven & # 39; The banking system is likely to be targeted to locals, and you may need to demonstrate official residence through a local permit or ID before you can even open a local bank account. There are usually exceptions to these rules – but the staff of local banks in small town branches probably won't know them. It is best to ask local authorities for their recommendations and choose a bank and branch that is used to dealing with expatriates and foreigners.
Either way, before you leave home, try to get a few copies of a bank reference from your home bank that is "who it might worry about" and have stated that you have been a customer for several years and have always operated your account well. These documents will prove to be very helpful in dealing with foreign, domestic and foreign banks. If your home bank says they want to apply for a specific bank reference, explain that you are traveling and you plan to buy overseas assets, but you still do not know in which country you will arrive.
It's not just the account opening procedures that vary a lot depending on the country you go to. So are the services offered, which may be significantly different from what you are used to at home. Make sure you take time to understand the terms of operation associated with your new account, otherwise your bank may assume one thing while assuming something else entirely. For example, how long do you have to wait after making a deposit before you can write a check against it? In some countries, there are complex value date systems where money may appear in your account, although it is not available to you. If there's something you don't understand, ask your bank.
Do you need a private bank account abroad?
Banking services vary greatly, but are rarely of very high quality. You should probably consider opening an account at an offshore bank that specializes in dealing with foreign residents. You can open it in a neutral third country – places like Switzerland, the British Channel Islands, Singapore and Panama are generally good. Big names like Barclays Wealth and HSBC offer these services as well as lots of smaller banks. It should also be possible to open non-resident bank accounts 24 hours a day without the need to travel there. You can then activate your account through internet banking and debit or credit cards.
There are two main reasons why you want to open an offshore account. The first is for convenience – deal with a sophisticated private banker who speaks your language and can offer the range of international services you require. The second is for privacy and property protection – overseas banks offer secrecy and discretion. When you become a non-resident in your home state for tax purposes, you will receive significant tax benefits by transferring your money abroad.
One of the convenient services that overseas banks offer to surfers is the multi-currency bank account. This allows you to save different currencies in the same account. For ease of use, you only have one account number, but you can keep all the major currencies there and transfer them as you wish with a click of the mouse. Another useful service is the so-called InvestLoan that lets you borrow money in one low-interest currency, then reinvest it in a higher-interest currency to make a profit.
Of course, it's not necessarily valid if you're moving to a banking center like Panama or the Cayman Islands, but if you're moving to a high-tax bureaucratic state like Mexico, Brazil or just about anywhere else in Latin America, you're not & # 39; I don't want to put all your assets into the local banking system where the government can see them on the radar. You also don't want to leave them in your home state like the US that will also try to tax you on these assets!
Another consideration when opening your Offshore account is whether to open a personal or corporate account. If privacy is a concern for you, you should usually set up a corporation outside the country and hold the account on behalf of the corporation instead of your personal name. It helps to keep your account under the radar, since in and out transfers will not display your name.
If you want to open a private bank account or a private company or company, there are advisors who can help you. They will explain a number of actions and discuss them, as well as direct you to specific banks that you can contact directly to open accounts. They can also tell you which banks will open accounts for foreign corporations.
A separate brokerage account is usually also a good idea, since most offline banks do not offer excellent brokerage facilities. But there are some. I know, for example, a discounted European outdoor brokerage base in Panama, which allows you instant online access to major global markets such as New York, London and Frankfurt.