For many expats, managing their financing can be extremely challenging. Here are some helpful information about some financial resources that will assist you while living abroad.
Moving Money Across International Borders
Download the TransferWise app onto your smartphone. It’s so easy and convenient for moving money around the world quickly and efficiently. Setting up your account takes a couple minutes. Once that’s complete, you:
– Log in on your phone or computer.
– Identify how much money and where to send the money (either how many dollars you want to send or how much of another currency you want to receive). The exchange rate plus fees is automatically calculated.
– Identify your overseas bank account information.
– Identify how to fund the transfer (your home bank account, debit or credit card, or wire transfer).
– Tap on the Pay button.
Foreign Bank Account
Once you have a residence visa, a local bank will allow you to setup a bank account. This will allow you to avoid paying conversion currency fees, out-of-network ATM fees and possibly foreign transaction charges. Having a local bank account also allows you to obtain assistance during business hours if your bank is local. In addition, pay for local goods using a local debit bank card without paying additional fees.
Note: Reporting requirements may be required if your overseas account reach a certain threshold. For example, if the value of your overseas financial accounts combined exceeds $10,000 at any point in the year, you will have to comply with the Foreign Asset Tax Compliance Act (FATCA) and fill out a special Treasury Department form during tax season, just to alert the U.S. to where your accounts are located. Other countries may have similar rules so it is important to obtain information related to your home country’s rules.
Credit Cards
You will likely not be eligible for a credit card issued by a foreign bank, so you will have to use U.S. credit cards. Always make sure your card imposes no foreign transaction fees. Most do, and they will hit you with 1% to, more likely, 3% of the transaction cost. Again, those fees add up if you’re using your card to buy groceries, pay for meals, and your general daily spending.
And if you’re going to get a bonus card, look for one that offers travel points or airline miles, not cash back. Those cards generally do not offer cash back on overseas purchases, though those that offer miles and points do award you, well, miles and points. So, they’re a better option.
Multi-Currency Debit Card
If you live overseas, chances are you’re traveling a bit to other countries in the region, which means you’re operating across multiple currencies.
You can use your U.S. or local debit card, if you want, but again you’re looking at excessive fees for ATM withdrawals and purchases.
Instead, apply for a debit card from N26 or Revolut. N26 is German, while Revolut is British, and both offer cards to U.S. residents. They allow you to hold multiple currencies on your card, and you can switch currencies within the card at favourable rates.
Investing Abroad
To the degree this matters to you, use your overseas address and residence card to your financial advantage by opening a local brokerage account.
Because of FATCA, foreign financial institutions likely won’t deal with you unless you can prove residence. Then they’re happy to do business. That means you can tap into investment opportunities abroad that you don’t have at home, giving you access to potentially greater gains through local stocks, mutual funds, or banking products that offer safe, stable returns of 5%, 7%, even 10%.
