If you’re planning on traveling abroad for a long period of time or about to venture overseas for work, the question might arise: How should I handle my bank accounts?
Like making the shift between two countries that speak different languages, moving between countries that use different financial systems and methods of currency can be tricky. You’ll need to get a few things squared away before you travel. You’ll want a debit card that works when you arrive at your destination, an account from which you can easily withdraw funds, and a bank that will address your questions or concerns promptly.
Here are a few ways you can make sure your overseas experience goes smoothly:
The simple solution to the “What to do when abroad?” question is to open a bank account that functions across borders.
A prime example of a cross-border bank account is HSBC Premier Checking. HSBC’s top checking account doesn’t offer much in the way of interest (0.01%), but it comes with free access to the bank’s International Banking Center. Using HSBC’s International Banking Center gives you access to 24-hour help lines around the world, along with a World MasterCard® that comes with no foreign transaction fees. Using a credit card without foreign transaction fees is key when shopping overseas because you can avoid paying extra to shop using a different currency, which is often an unavoidable consequence of foreign travel. HSBC’s International Banking Center is available to non-Premier HSBC customers for $200 a month and the Premier monthly fee is $50 unless you hold more than $100,000 with HSBC. You could also open an HSBC Plus Checking account and receive half off your International Banking Center membership.
You could also open an international, or “offshore” bank account in your new country of residence that you could use outside of the U.S. One caveat: If you hold more than $10,000 in the account, you should report it to the U.S. for tax purposes, according to Suite101.
Optimize Your Current Banking Situation
You might not need to open a new account at HSBC or a similar institution if your current bank offers international services.
The banks that offer overseas services are usually large institutions with enough capital and customers to justify expanding their reach across the ocean. For example, Chase has an International Financial Services division that can help American citizens manage their finances while they live overseas. Chase Premier Platinum customers can use the bank’s international services.
If you maintain a run-of-the-mill checking account and just want to use your debit card for day-to-day purchases in your temporary home, make sure you prepare your debit card for foreign travel. Call your bank well in advance of your trip to inform the institution you will be using your debit or credit card overseas. If you do not take this step, your bank will not flag your account for overseas use and your account might not accept any card charges.
You’re going to spend money while abroad. But how you spend could depend on several variables.
First, find out what foreign transaction fees come with your credit or debit card. In some cases (HSBC Premier Checking), you won’t face these charges. With many other accounts, using plastic to pay can come with charges. Depending on your credit card issuer, your fee could sit in the 1% to 2% range, but be sure to check your fee schedule before you travel. If your current situation comes with fees that are too high to stomach, you could consider converting your currency to cash or using travelers cheques.
Travelers cheques are inconvenient because they give you an extra thing to carry around, but they come with the benefit of being accepted worldwide. You can request the cheques in various denominations and many are backed by American Express, meaning they are refundable within 24 hours if you happen to misplace them. You may need to pay a fee when purchasing travelers cheques — this could vary from location to location.
If you decide to withdraw cash from ATMs, you should do some research and see whether your bank charges fees on foreign withdrawals. Some banks offer customers fee-free withdrawals while others charge anywhere from 1% to 5%, meaning you might want to consider using plastic for everyday purchases.
An easy way to obtain foreign currency is by converting your funds online. Travelex, one of the world’s largest money-transfer systems, currently offers commission-free transactions through its website. You can use Travelex to stock up on foreign currency before your departure or transfer your left over foreign funds to U.S. Dollars upon your return to the states.