Expat Banking

The burning questions answered about expat banking options.

Staying with your Existing Bank

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 look at the expat banking options you need to know when relocating.
When expats begin withdrawing their money in the local currency or performing international transfers, many people realize that international transfers can be costly. When 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.
While globalized, the banking world offers few advantages to people living permanently overseas. As summarised below, several expat banking options are available if you are relocating abroad or have already relocated.
If you are relocating overseas but will keep some assets in the UK (property, etc.), maintaining your existing bank account is prudent. This allows you to preserve 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, providing a sense of security and reassurance.
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. Suppose you wish to keep your existing bank account open while living overseas. In that case, 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, explain your plans, and see if there are available options to suit your scenario.

Expat banking with an international bank account

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 you have 24/7 easy access to your finances. This option provides peace of mind, and 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. However, an international bank account’s flexibility and ease of use can empower you to manage your finances effectively.

Opening an Online Foreign Exchange Account

A significant advantage of this option is that you can open an account from wherever 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 (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 must double-check that the receiver is ok with receiving funds via this method.

Opening an Offshore Bank Account

Many UK banks also offer offshore bank accounts, generally in a tax haven like the Isle of Man, where different tax rules are applied. Opening an offshore bank account typically involves providing proof of identity, proof of address, and sometimes a reference from your current bank. 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 offshore bank accounts offer increased confidentiality, which, in return, increases the standard of security checks when performing money transfers.

Opening a Local Bank Account

If you plan to move overseas for an extended period 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. Opening a local bank account could also assist with changing your country of domicile, which is the country that you consider your permanent home and where you have significant ties. This change in domicile could affect your tax status and other financial matters, especially when combined with the closure of any UK bank accounts.

Combining the above Options

There is no ‘one type fits all’ solution. For many expats, combining the above options may be more beneficial and better suit their needs and requirements.

Making a Decision

It is essential to consider your circumstances, and below are some questions to consider when deciding:

Will your move overseas be permanent or temporary?
Are you planning on returning to the UK? (If you plan to return to the UK, you may wish to keep your bank open for ease)
What currency will your income be paid in? (You should consider a bank account which offers the same currency)
Are you keeping your assets in the UK? (If so, keeping your UK bank account would be wise)
Can you afford to have multiple bank accounts?

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