By  Updated on Fri Sep 19, 2014

What You Should Never Do With Your Bank Account If You Are Moving Abroad

Moving is stressful enough — imagine having to pack up your belongings to settle down in a new country! Beyond the logistics of actually packing up and moving, you have to take care of your financial responsibilities, too. There’s the car note you have to pay off, Sallie Mae wants your student loans payments, and you’ve got to send $2,000 to your brother once you’re settled for money he lent you. Take a breath. These things should be easy to accomplish, except… wait. You closed your U.S. bank account and credit cards.

What You Should Never Do With Your Bank Account If You Are Moving Abroad

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Statistics on how many Americans live overseas are hard to come by because of limited data, but the State Department estimates the number of U.S. citizens who live abroad (and are not working for the government) to be 6.32 million. Other estimates say only 2.2 million Americans live abroad. If you’re planning to join one of the millions of Americans living abroad, here’s a good piece of advice: keep your bank and credit card accounts!

One of the biggest mistakes Americans make when they move overseas is closing their bank and credit card accounts. Why? Because upon returning back to the U.S., you might be in for a rude awakening when you have difficulty opening new lines of credits or applying for loans. Obviously you’ll have to open a new bank account in your new country, but there are many reasons why you should keep your account in the United States as well.

For starters, unless you are already well acquainted with the country you’re moving to, you don’t know how their banking customs and systems differ from what you’re used to. What’s the process of applying for a credit card? Are fees different? Will you only be able to use ATMs during certain hours? Some countries are very strict about what could happen if you default, others are have stringent currency controls. Learn about your new country’s banking system before you make the move overseas. It might not be so easy to open a bank account in your new country, so having one in the U.S. isn’t a bad idea. Beyond customs, though, there are many other reasons why you shouldn’t close your U.S. bank or credit card accounts.

Reasons to keep your U.S. bank account open

Are there things you will have to continue paying even as you build a new life abroad? It will be a whole lot easier to pay for credit cards, loans, your car and phone bill with a U.S. bank account rather than a foreign one. Imagine the logistical nightmare you could encounter if you try to pay some of these bills with a foreign bank account — not to mention the fees you might incur! Plus, if you’re someone who doesn’t really use online banking, sending a check from a foreign bank to pay for a bill might take several weeks to clear. Keeping your U.S. bank account open will help you pay off your bills in a stress-free and easy manner.

One way that you can easily keep your bank account open — or credit card for that matter — is by changing your account’s registered address to a loved one’s home. Using a relative’s address or your parents’ residence for your account will allow you to easily pay off bills and complete other transactions with your U.S. bank.

Make sure the person you choose is trustworthy, however, because they might be receiving some of your important financial statements. If you don’t want to rely on a loved one to receive your billing information, you might consider informing your bank about your overseas move and finding out whether it will allow you to change your billing address to a foreign destination. Be careful if your bank allows this to happen because even though you have a foreign address, it doesn’t mean the institution will mail your statement to you more quickly. You don’t want to get hit with late fees.

Whether you use a loved one’s address or your own overseas, it’s a good idea to switch to paperless communications as much as possible. It removes the possibility of your bill getting lost in the mail and prevents other incidents from occurring.

Fees to avoid

Another reason to keep your U.S. bank account open is the fact that it will save you money on big fees. How often do you plan to visit America? If you plan to make trips back annually, keeping your U.S. bank account open will help you save cash on fees for foreign transactions or out-of-network ATM withdrawals.

Of course, if you have a credit card with no foreign transaction fee, this isn’t something that you should worry about. Even if you don’t plan to make yearly trips back to America, keeping your U.S. bank account might come in handy if you want to transfer funds to your friends or relatives back home. It’s a lot cheaper depositing money into another U.S.-based bank from an American account for your mother’s birthday than wiring money from abroad.

Reasons to keep at least one U.S. credit card account open

First of all, you’ll cause some damage to your credit score if you close all your healthy credit card accounts at once. But more importantly, if you ever return to America, you might have a difficult time getting a bank account or access to credit if you cut all your U.S. accounts. Keeping a U.S. credit card account open will help you maintain a credit history so that if you ever return to America you won’t appear risky to lenders. Of course, you should use the card every now and then so that your account isn’t labeled inactive.

That said, if you have multiple credit card accounts, you don’t need to keep them all open. A U.S.-based store credit card won’t really do you any good if you’re living in Marrakech, for instance. If you are going to close a few credit card accounts, do it over time and not all at once to avoid damaging your credit score.

You should also inform your U.S.-based credit card issuer that you’ll be abroad if you plan to use the card overseas (make sure yours charges no foreign transaction fee though). Also, keep close watch on your account and check your online statements each month. The last thing you want is for a scam artist to cause you a financial headache by stealing your identity.

Before your leave, be sure that you call your card’s issuer and inform them of your plans of moving abroad. Most issuers shouldn’t have an issue with keeping your card account open while you live overseas, but it’s best to call for confirmation.

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  • ctak

    I once lived abroad for a year, but kept all of my accounts open since I
    had a longstanding history with my bank and credit cards. I just made
    sure to avoid using my credit cards, since I would’ve probably been
    charged a foreign transaction fee on those. Now that I think about it, my most frequent method of payment was cash!