Moving to a new country can be super exciting. And terrifying. In many cases, you’re leaving behind family, friends, and the security that comes with living in a place you are familiar with. But it can be the start of a completely new, exhilarating adventure.
Whether you’re moving to a new country to for fun, work, or for retirement, you’re one of more than 9 million Americans who are living the expat life. But before you settle into your new home, there are a few things you’ll need to iron out.
You’ll have to answer questions like, “can I open a U.S. bank account from overseas?” Or “should I open a local bank account?” And you’ll have to figure out how to move money to another country and decide whether or not you’re going to need a U.S. bank account still.
Banking overseas for U.S. citizens can be complicated, especially if the institution you bank with in the U.S. doesn’t have branches locally in your target country. Compounding problems is the fact that moving to another country can be expensive.
But if you have your heart set on learning Spanish in Barcelona or retiring to Costa Rica here are some things to consider when it comes to banking while living in a foreign country.
Should You Keep Your U.S. Bank Account?
If you’re moving abroad you may think of getting rid of your American bank account, but it may behoove you to think twice before closing out your account. It can be worth keeping an American bank account for convenience.
If you have a trusted friend or relative still residing in the U.S. it could be worth asking them to use their address while you are living abroad. If you do so, be sure to opt-in for online statements. In this day and age you can usually effectively manage your accounts with a secure internet connection.
Before you make the move abroad it can be worth keeping at least one American credit card open. If you’re able to keep an American credit card open while you’re living overseas, you may have an easier time maintaining or rebuilding your credit score.
It can also be worth keeping your investments stateside. Fees on mutual funds in foreign countries are often higher than on funds in American. Additionally, trading securities in another country could potentially lead to a tax headache, so be cautious and stay informed on current regulation in the country you plan to live in.
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Should You Consider Moving Your Money Abroad?
Determining how much of your money you plan to move abroad will depend on your personal situation and the lifestyle you intend to lead when you arrive. Are you moving for a one year program to teach English abroad? Are you retiring to another country? Are you contemplating living there for the next 10 years?
If you’re going to be living in a foreign country for a short period of time it may make sense to open a local bank account but keep the majority of your finances in the U.S. since you’ll likely need a U.S. bank account when you return home. If you’re going to be living abroad for a long stretch of time, you may need more access to your money through local institutions.
The benefits of having a local bank are pretty clear. As a full time resident in a foreign country you have bills and standard expenses just as you would in America. A local account allows you to have easy access to your money so you can pay all of your bills on time.
At the same time, financial regulations vary from country to country. Some countries welcome expats while others have much stricter regulations in place and require longer term proof of residency.
Reviewing Local Banking Laws and Regulations
If you’re considering moving to another country, be sure to review the local financial regulations and figure out how they will impact you. You’ll need to determine how easily you’ll be able to open an account in your new chosen country of residence.
In 2010, the United States passed the Foreign Account Tax Compliance Act (FATCA), which has made it increasingly difficult for American expats to open foreign bank accounts . Essentially, the U.S. government required foreign countries to keep tabs on Americans opening bank accounts. The increased American regulation and scrutiny from the IRS and Department of Justice has resulted in many foreign countries and banks not accepting deposits from American citizens.
This can make opening an account in a foreign country difficult, so review the regulations in your target country ahead of time so you know what to expect.
Other Possible Options
If you aren’t interested in opening a local bank account the biggest factor you’ll have to account for is having easy access to your money. If you bank with a multinational institution you may be able to get by without opening a local account. You may be able to rely on the local branches in your new country.
If not, you’ll need to find a solution for accessing your money quickly. Sure, there are plenty of credit cards that don’t require you to pay foreign transaction fees, but that isn’t going to cut it if you need fast access to cash.
One alternative to opening a foreign account is managing your money with a SoFi Money® cash management account. SoFi Money doesn’t have any account fees (subject to change).
You’ll be able to manage your cash and track your spending in the app. Plus, you can use any ATM that accepts Mastercard® and we’ll reimburse 100% of the ATM fees anywhere in the world (subject to change). This means you’ll be able to access your money regardless of where you’re currently living.
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