You’ll obviously want to open a bank account in your new country. Each Expat Info Desk relocation guide explains in detail how to open a bank account in a given foreign city and give you step-by-step instructions on the documents that you will be required to provide, how long the process takes and the type of accounts that will be available.
There are many good reasons, however, to keep your current primary American checking account and some credit card accounts active. All you have to do to keep it intact is have the address on the account changed to a relative or friend’s address in America and have your statements sent to you online.
To begin with, maintaining your USA account keeps your American credit score alive and well (as long as, of course, you pay your American credit card bills on time) by proving you've been financially active in the U.S. even though you’ve lived elsewhere. If and when you return to America, this will ensure that you have no problem obtaining a mortgage, car loan, or other loan that requires a credit history report.
Another bonus is that you can still take advantage of American-only purchases and offers. For example, when the initial iTunes store opened up for the iPod, it was not available in many countries besides America. By opening an account with an American credit card, however, an expat could still have access to iTunes even though no one else in the new country could.
Also, it’s much easier to pay American bills, do bank transfers and send checks to U.S. friends and/or relatives by having an American account that features online bill payment (as virtually all do at this point). Often times, check from foreign banks take literally months to clear, if they are accepted at all.
What’s also a huge plus is that, if you’re with a large financial institution such as ETrade, your debit/credit card will work at ATM’s all across the world – and you may not even be charged a fee for using it. Since foreign currency rates fluctuate, you may find it much more profitable at times to withdraw money from your U.S. account to spend in your new country – and that’s quite easy and convenient to do with your American ATM card.
You will find that it is incredibly easy to manage all your American banking online in this day and age. There is absolutely no reason any longer for you to leave a reluctant friend or relative back in the states in charge of your American finances. As a matter of fact, if the person doesn’t have time to keep track of your bill payments, etc., you may find you end up with your credit harmed or your accounts overdrawn. With a large bank or financial institution, you can pay any kind of American bill online and have money sent to any American address or account – all on the bank’s website.
Of course, as mentioned earlier, you’ll still want a bank account in your new country for day-to-day living – and even for savings accounts, if the interest rate is more favorable. Be careful, however, of currency fluctuations and trends if you’re planning on moving a substantial amount of money to your new country. If the value of the dollar in the country to which you’ve relocated is on a downward trend, you could lose a substantial amount during its slide. Some countries’ currency is more volatile than others – make sure and research this thoroughly before you decide to move a large chunk of your money (and remember that even though you move money offshore, you can still be taxed on foreign investment income in the U.S.).
Which foreign bank should you choose abroad? A large, reputable bank is preferable, especially if you’re new to the country. If possible meet or email accounting firms in the country to where you’re relocating and ask their advice on a local bank. Your company should also be able to recommend stable and trust-worthy options. The Expat Info Desk city-specific guides also provide information on banks in cities around the world.
If you do end up moving a large amount of money to an account in your new country, consider using an international currency exchange service, such as XE Trade, to do the actual transfer. These companies will usually give you a better currency conversion rate than commercial banks. You can make the desired transfer completely online and lock in a low rate for up to 30 days. These companies are also experts on international money transfers and know how to handle it – making international transfers through your current US bank can often be frustrating, as most bank employees, especially located outside of big cities, don’t have the experience of dealing with or understand the ins and outs of the process. And, again, the conversion rate will not be as favorable.
As far as your current stock portfolio and American investments go, there is no reason you can’t keep them with the financial institution with whom you currently maintain investments. You can do all the trading you need to do online. You may also find, if you move those investments under the auspices of a brokerage firm in your new country, your tax liability might be more, as you will be taxed under the new country’s laws as well as America’s.
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