A Guide to Expat Banking

Copyright Lisa R. Mitchell. Republished with the permission of the author.

1) Q - What is the single most important aspect of financial services that an expat should know once they have accepted an international assignment?

A - Take care of your financial services pre-departure. Do not wait until you have arrived in your new host country to determine how you are going to receive your financial compensation and fulfill your new host country and remaining home country financial obligations.

Investigate whether your current financial institution has a dedicated expatriate division or a special program for expatriates. If not, consider either switching financial institutions or opening new bank accounts for the duration of your international assignment. You do not want to find out at 3:00 a.m. on a holiday weekend after you or a family member has met with some misfortune that your bank in your home country cannot provide assistance to you in an emergency.

Take the time to do research on local banks in your new host country. Use any pre-visits or house-hunting trips to inquire at local banks about services for expats, foreign nationals and non-permanent residents.

Do not automatically assume that if you already bank with a global bank that banking in your host country will be the same as banking at home. Most often, banks are subject to local restrictions and may require different procedures than you are accustomed to at home.

2) Q - What should an expat know about using ATM and debit cards overseas?

A - Before leaving for any travel overseas, it always a good idea to check the functionality of your ATM and debit card.

ATM card - An ATM card will allow you to withdraw money from ATMs globally, depending on your ATM/Debit Card's network participation-usually the information for accepted networks will be on the back of your ATM card. Before you leave for your overseas trip, it is a good idea to know your daily withdrawal limit (generally in the U.S. it is $300-$1,000 USD). Be sure to check with your financial institution on whether your withdrawal limit is per calendar day (generally Sunday through Saturday) or per business day (generally Monday through Friday). Friday, Saturday and Sunday are separate calendar days, but are generally considered as only one business day. If you were faced with an emergency or needed a large amount of money during the weekend, it could be difficult to access your funds.

Debit cards - Debit cards also have POS (point of sale) daily limits-restrictions on how much you can spend per day. Your current limits may not be high enough to meet all your financial needs for settling into your new home country. This is of particular concern if you are moving to a country where your currency is weak against your new host country currency, e.g., USD vs. Euro.

Be aware that for ATM/debit usage, you may only have access to your primary account which is usually your checking account. If you keep most of your money in another type of account, be sure that you can easily transfer funds between accounts while you are overseas.

In addition to daily withdrawal limits, some foreign countries also have withdrawals limits on ATM machines, which may differ from your daily withdrawal limit from your bank.

PIN - Make sure you know your Personal Identification Number (PIN) both numerically and alphabetically. Often ATMs in certain countries do not have keys that display both numbers and letters. Also some countries only allow a 4-digit PIN code while in other countries it can be a 4 to 6 digit PIN code. Be sure to check the PIN code status of ATMs in the country you are moving to and ensure that you have the ability to change your PIN remotely, via telephone or Internet, in case of identify theft or fraud while you are overseas.

3) Q - How can I ensure that I am getting the best foreign exchange rate?

A Many expats read the financial newspapers and do not understand why they do not receive the same rate of foreign exchange. What expats don't realize is that foreign exchange rates quoted in financial publications are based on large trade volumes and do not accurately reflect the rates given to individuals. Also, printed newspapers do not reflect real time and foreign exchange rates change from second to second. To gain the most favorable exchange rate, it is best to use your ATM or debit card as you will receive the internal bank-to-bank rate. Also, many banks also charge an additional foreign currency conversion fee.

4) Q - Why is it difficult for expats to open a bank account in a foreign country?

A - Since 9/11, most countries have enacted tighter regulations regarding business with foreign nationals. For financial institutions that has meant requiring more documentations to open a bank account. When opening a bank account in a foreign country, at a minimum, expats should be prepared to have on hand:

• Government identification (i.e., passport and driver's license)
• One bank reference or current bank statement from your local bank
• A letter from your employer including length of employment, duration of assignment in foreign country and salary/other compensation (especially if applying for credit)
• Proof of address in home and host country

5) Q - Can I still use online banking for all my banking needs?

A - Be sure to check the functionality of your bank's online banking service. Remember that online banking is usually country specific and will provide service for where your accounts are domiciled. This means that online banking in the US may only provide service for your US bank accounts and not any bank accounts held overseas. The Bill Pay function is usually also country specific meaning that you may not be able to use your US Bill Pay feature to pay a bill in a foreign country.

Also check to see if there are any transactional limits on account to account transfers, bill payments or wire transfers.

6) Q - Why is it difficult for expats to obtain credit in certain countries, especially in the US?

A - From a banking perspective, foreign nationals new to a country without a credit or work history in the country are generally viewed as more of a risk than local customers. While some countries have established credit bureaus and can provide their citizens with a credit history, a foreign credit history does not usually transfer across countries, and most banks are not familiar with how to interpret a foreign credit report. As a result, an expat new to a country, and applying for credit, such as a credit card, may experience difficulties. Again, expats should establish their financial needs pre-departure and find a bank that can provide appropriate financial solutions to their financial needs.

7) Q - What is one of the biggest mistakes that expats make in terms of financial services?

A - Closing their banking relationship with their home country financial institution. Expats usually think they will not have a need for a financial relationship with their home country, but very few expats are ever able to fully cut ties with their home country, especially financially. As banking laws change frequently, an expat may not be able to get a bank account in their home country easily again after living abroad for a long period of time.

If an expat expects to receive home country payments from rental property or investments, or if there is a family member that relies on financial assistance from the expat, ties should never be severed with the home country financial institution.

8) Q - What should an expat know about transferring money between the home and host country?

A - Moving money across borders is a key issue for expats. Unfortunately most expats think they can rely solely on their ATM or debit card to obtain funds, not thinking that emergencies may arise that could exceed their ATM/debit card withdrawal limit.

Few banks will accept telephone instructions for funds transfers because they cannot verify the identity of the caller and will not authorize the transfer unless they are face to face with the customer and can verify the customer's identification and signature.

If you are an expat living outside your home country the usual procedure of going to the branch and completing a funds transfer form and showing appropriate identification is not feasible. Neither is mailing a funds transfer request to the bank from a foreign location. A friend or family member may not know the quickest, cheapest and most reliable method to send money. In other cases, an expat may not want to give a family member power of attorney over financial transactions, or the expat may find themselves in a sensitive situation, such as being incarcerated, where they don't want to ask friends or relatives to handle their finances.

9) Q - Should I rely on my company to take care of all my financial services needs?

A - No. Even if assistance with financial services is part of your international relocation package, your company may have hired a financial services provider with whom you are not comfortable or does not fully understand the challenges in establishing banking services in a foreign country.

Also, be clear about what the international relocation package covers in terms of financial services. Some things to include would be reimbursement of wire transfers and ATM fees, and assistance beyond traditional banking products such as investments, retirement, savings for college, and insurance.

10) Q - How do I invest as a foreign national?

A - Countries generally have very specific regulations and products and services for foreign nationals regarding investments. Check with a local financial institution on guidelines. For investments in your home country, as with traditional banking products make sure that you can conduct your investment business remotely via telephone, email and the Internet to allow for time differences.