You wouldn’t open an international or local bank account when on holiday, and surprisingly, many expats do not open a bank account when relocating overseas. Here we take a look at the expat banking options that you need to know when relocating.
When expats begin to withdraw their money in the local currency or begin performing international transfers, many people realize that international transfers can be costly. Combined with currency conversions, the negatives soon add up.
There is also a widespread misconception that because their bank is an international name (such as HSBC), savings will be made by staying banking with them. The banking world, while globalized, offers very few advantages to people living permanently overseas.
If you are relocating abroad or have already relocated, several expat banking options are available to you, which are summarized below.
If you are relocating overseas but will still be keeping some assets in the UK (property, etc.), keeping your existing bank account open is wise. By doing this, you will be able to maintain your current arrangements, such as standing orders and direct debits. It also ensures that you already have a bank account in place if you decide to return to the UK. If you are an expat who has been based overseas for a substantial amount of time, re-opening a bank account can be a timely and challenging process.
If you wish to keep your existing bank account open while you are living overseas, your bank may offer special services such as free use of international ATMs and lower currency transaction fees.
Overall, it is wise to speak to your bank and explain your plans and see what options they have available to suit your scenario.
Most UK banks also offer an international bank account which may allow you to manage and exchange foreign currency quickly and effectively; this usually comes with a monthly or annual fee.
Most banks also offer online banking and telephone lines to ensure that you have 24/7 easy access to your finances. This option provides peace of mind that you can speak with people in your native language.
Often banks do not offer great rates of interest, so for long-term savings, this may not be the most suitable option.
Some banks may offer a complimentary international savings account, so if this is a suitable option for you, always read the fine print and be sure to factor this in when comparing and making a decision on who to bank with.
A significant advantage of this option is that you can open an account from wherever in the world you are and send and receive money to any bank account. For example, you can send money to the UK using this service even if you are not a UK resident.
You can transfer money to various currencies without added fees and charges (unlike using a bank) and depending on the foreign exchange company, you may even be granted a credit or debit card.
It is worth noting that some companies and pension trustees do not accept money transferred through a foreign exchange as it is classed as a third party, so you would need to double-check that the receiver is ok with receiving funds via this method.
Many UK banks also offer an offshore bank account which is normally located in a tax haven such as the Isle of Man, where different tax rules are applied. Offshore bank accounts are typically more expensive and have several conditions, such as a minimum annual income and a clause that you should pay this into the account.
A key difference between an offshore bank account and other bank accounts is that an offshore bank account offers increased confidentiality which in return increases the standard of security checks when performing money transfers.
If you plan to move overseas for an extended period of time and are confident in the local language, you could open a local bank account. This option offers the advantage of creating a local credit profile which could increase your chances of borrowing money locally in the future.
Opening a local bank account could also assist with changing your country of domicile as it would emphasize your commitment to cutting ties with the UK permanently, especially when combined with the closure of any UK bank accounts.
For many expats, there is not a ‘one type fits all’ solution, and a combination of the above options may be more beneficial and suit your needs and requirements better.
It is essential to consider your circumstances and below are some questions to consider when making a decision:
