As an expat in a foreign country, one of your crucial considerations is managing your financial transactions. This may seem challenging, given you’re in a new environment. However, it’s not something you can’t overcome. Utilizing the right financial tools—such as a local or international bank account—will make it easier to manage your finances and fit your lifestyle as an expat.
If you’re staying for a long period in another country, there are many good reasons to open an account. Not having a locally issued card will lead you to pay higher fees for transactions like money transfers, credit card purchases, and even ATM withdrawals. Imagine how much you can save if you use your bank card for payments.
Commercial establishments, utility companies, and other businesses may not accept foreign-issued cards. Even if they do, some transactions can take a while to process. You may also find a local bank account handy in complying with requirements for future investments you may want to make.
While opening a bank account may seem tedious, it’s simple once you learn the process and prepare your documents. Here’s a quick step-by-step guide to opening a bank account as an expat:
1. Make a list of your banking needs, such as salary remittance, money transfers, bills payments, and investments.
2. Evaluate the account type that will suit your needs. If you need to stay in a country for a long time, you can take advantage of local bank accounts. International bank accounts allow more flexible transactional banking, which may be useful if you frequently travel to different countries.
Other banks also offer expat accounts under certain eligibility requirements. Make sure you research bank product offerings in your destination country.
3. Compare different factors such as currency conversion, interest rates, maintaining balance, transaction fees, online services, credit and debit card access, and account transaction restrictions.
4. Consult the bank in your home country. The bank you’re with in your country of origin may have international banking services in your destination country. If they do, they can facilitate your new account.
5. Prepare your documents. Requirements may vary with each bank and country. Still, these are standard ones:
- Your passport
- Government-issued identification
- Proof of residence like billing statements
- Reference letters from a bank and personal acquaintances
- A declaration of the reason for opening an account
- An authenticated copy of your birth certificate
Some of these documents may need to come or be authenticated from your country of origin, so it’ll be better to prepare them before you leave your home country.
6. Explore additional requirements. Offshore banks can impose mechanisms against illegal activities such as money laundering. They may ask you to present bank statements, pay slips, or other similar information that can attest to the purpose of your bank account application.
7. Review policies and regulations related to your bank accounts. For instance, U.S. citizens must comply with IRS regulations that require them to pay taxes for interests earned in their bank account, even if it’s from another country.
Before opening your foreign bank account, you should familiarize yourself with its policies, like fee structures and money transfer restrictions. This will help you control your finances better. It would also be best if you asked yourself and the bank the following questions:
- In what currency is it best to maintain your account?
- What’s the best option to avoid exorbitant fees for frequent transactions?
- How much of your deposit will you insure in case of economic or political instabilities?
- What options are available to reduce tax payments?
- Are banking privacy or confidentiality agreements in place?
- How can you shield your hard-earned money from fluctuations caused by inflation?
The bottom line
As a foreign expat, it’s best to make bank accounts work for you. The process isn’t entirely complicated. You just have to prepare the right documents you need, take some time to study some banking regulations and policies, and find the fit between your needs and the bank’s services.
You can have a local bank account for domestic needs and an international bank account. Having both gives you more flexibility when transferring money to other countries. Whichever choice you make, the bottom line is that your bank should help make your life easier as an expat.
Randall Brody is the founder and CEO of Tax Samaritan and Peace Of Mind Tax Help. Randall has also been a serial entrepreneur, a former banker, an NTPI Fellow, and an IRS Enrolled Agent. When he isn’t busy rescuing taxpayers from the IRS and state tax authorities, Randall enjoys skiing and spending time with his wife, children and grandchildren.