If you decide to leave the US and move to a foreign country, one of your first decisions is ‘How do I get money when I need it?’. Are there difficult expat banking issues to deal with? We have had to answer that question in 6 different countries. There are some similarities, but also opportunities for costly mistakes. But it does not have to be complicated.
Foreign Bank Accounts – A Trap for the Unwary!
THIS IS AN IMPORTANT WARNING FOR U.S. CITIZENS! If you plan to move significant amounts to an account outside the US, there are complex reporting rules that, if violated, carry extremely high penalties. And these penalties are charged every year whether you know about them or not. Therefore, please consult a U.S. Income Tax expert for answers to your specific circumstances. I know the answers for my circumstances, but everyone’s needs and financial status is different.
For this reason and others, we have chosen to leave our money in our US bank account, and only transfer what we need for our personal living expenses. Our foreign account never gets much above $2,000 USD, so we are not affected by the complex rules that start at about $10,000. Our Social Security checks are direct deposited to our US bank account. Our lives and financial needs are very simple and we like to keep them that way.
Before I share our experiences, I must advise you that these comments are based on our experiences as well as our personal circumstances. I am not nor do I claim to be an expert in foreign banking matters. But I think our experiences can shed some light for you and perhaps reduce your concerns. Here are a few of our experiences.
This was our first stop after leaving the US. And we were advised to bring cash of less than $10,000 with us on the plane. I rode to Coxen Hole to the Banpais office with my US passport. It took a while, and there was lots of paperwork, but they opened a checking and savings account the day after we arrived and ordered debit cards for us. They required me to wait a couple of days until the account was fully open in their system before allowing me to deposit the cash we brought. But then, they would only allow me to deposit $3,000 per day.
Two days later, I put $3,000 cash in my pockets and wallet, jumped on my Scooter, and drove into town. On the way, it started to sprinkle. Then the scooter engine died. So, I’m on the sidewalk next to the ocean with lots of cash! A guy comes up to me and says he can fix my scooter, but he needs to tow me to his shop. He came up behind me on his scooter, stuck his toe into position, told me to get on, and he “toed” me to his shop. It was in a very impoverished part of town but only a block off the main road. He told me to go take care of my business and he would have the scooter fixed when I returned.
After that, everything worked as expected. I made the deposit, caught a cab back to the mechanic, paid him $40 (which my landlord later said was way too much), and rode home without incident. A couple more days and we had deposited all the cash we brought from the US. And the main reason I selected Banpais is that they had a working relationship with Bank of America, and subsequent transfers were very easy.
I had a rude awakening when we arrived in Panama. No bank would open an account for us without a Cedula. This is a national residency card, and the process takes months and costs nearly $3,000 USD. But we had not decided how long we were staying, so we just used our debit card to get cash from our Bank of America account in the US. This was fairly expensive, but we really saw no other alternative.
Shortly after this decision, we learned that Scotia Bank had an arrangement with Bank of America for no ATM fees, and that made our life much easier. We lived in Boquete Panama for 17 months and never did open a bank account in Panama because there was no need.
We only stayed in Cuenca for 3 months. Again, we used our debit cards when we needed cash. We reduced our cash needs by paying as many of our expenses as possible with our Chase credit card because Chase did not charge international fees. Then we paid the credit card charges each month from our Bank of America account. Had we stayed longer we would have needed to obtain a Cedula before being able to open an account.
Banking is one more reason we love Medellin. It only took about 4 weeks to obtain our 3-year visa and Cedula. After that, we opened an account at Bancolombia and they gave us debit cards. This was mostly because it was more convenient to pay utilities, health insurance, internet, and mobile phone bills online with the debit card. But we still had to find a better way than ATMs because the fees were about $15 per transaction, and the most we could get in each transaction was about $200.
Fortunately, I discovered World Remit! What a life-saver they are. With World Remit, I can transfer as much as $5,000 USD from my US bank account to my Bancolombia account. The total charge is about $4 USD. The transfer takes at most 15 minutes, and it can be done 24 hours a day 7 days a week. This makes it much easier to keep up with our costs in Medellin. It also doesn’t require currency exchange every time we go to the grocery or a restaurant. And World Remit gives us a much better exchange rate than the ATM machines or money exchange stores.
I know this is not an exhaustive treatise on all the banking rules in these countries. But personal banking issues may not be as difficult as you may have been led to believe. And with a little bit of work, you can generally figure out the best solution for your particular circumstance.
Thanks for your attention. Please comment on this article. Tell me what you liked and/or didn’t like. Also let me know other topics in which you are interested.