A big concern, when living and traveling abroad is how to deal with banking and money management. A bank that may be fine in the US may be a poor choice (high fees and restrictions or poor ATM availability) for international use. If you are living fulltime in another country, you may need to open a foreign bank account in that country in order to receive certain types of payments or, if you are on a pensioner or temporary resident visa, to deposit funds to qualify for the visa itself. So, let’s dive into this topic.
US Remote Banking
If you are not setting down roots in a foreign country on a pensioner or temporary (or permanent) resident visa, or you will not be legally working for a company based in your destination country, you can make out fine by maintaining one or more bank accounts in your home country and conducting all your financial transactions remotely using the banks’ online apps, using credit cards for most expenses, and getting your cash from foreign ATMs. The biggest issue will be choosing the correct banks and types of accounts in order to keep banking fees low and to have good ATM availability.
The two major international ATM networks are Cirrus (affilitated with MasterCard) and Plus (affiliated with Visa). These two networks have different ATM coverage by country, so if you want the best ATM coverage you should have at least one ATM card from each network. If you want to know which network would be the most useful for your proposed destinations you can google “ATM Locator MasterCard (or Visa)” and follow the links. For example, for our upcoming Guatemala trip, I looked up MasterCard (Cirrus) ATM locations in three places we planned to spend a lot of time, Antigua, Panajachel, and San Pedro la Laguna and found exactly zero Cirrus ATMs in those three towns! The same search for Visa Plus found two ATMs in San Pedro, five in Panajachel, and about 20 in Antigua. Obviously our Visa Plus ATM card will be the one we use in Guatemala. Pick another country and the reverse might be true. Keep the card you’ll use the most in your money belt or hidden pouch and hide the other card in your luggage. That way, if one card gets lost or stolen then you still have a card you can draw money on until you get a replacement card from the other bank.
If you have two ATM cards on two different networks, you will probably have two different checking accounts at two different banks. You should make sure that the banks you are choosing have online banking websites which are available from your destination country and which will provide all the services you will need. You should be able to make sure that your pension or social security paychecks can be automatically deposited, and that you can manage automatic bill payment transactions remotely. If you will be earning money from remote work while traveling you should make sure that the bank integrates properly with whatever payment system you are using (PayPal, etc.) for your work. You should have savings accounts at the same banks where you have your ATM checking accounts. As discussed in the post on security <here> it’s a good idea to keep minimal balances in the checking accounts which are tied to your ATM cards, just in case you should happen to become the victim of an ATM kidnapping where you are forced to withdraw funds by the kidnappers. Set up the accounts up so that the savings accounts do not automatically supply cash to the checking accounts in case of overdrafts.
You also want to select banks that have low ATM charges and international transaction fees. When researching banks with low international ATM fees, be sure to explore credit unions as an option. Our credit union has some of the lowest fees available and their ATM card is on both the Cirrus and Plus networks which is a real advantage. When we first started looking at ATM fees we found that our regular bank actually was pretty bad, charging about 5.5% fees on a $100 international withdrawal and over 3.8% on a $300 withdrawal. For the same transactions, our credit union charges a flat 1% on up to six withdrawals per month, which is about as many as we would normally make in a month anyway. Some banks charge low (or no) ATM fees if you participate in their online-only banking option, for example, the Capital One 360 checking account. I’m not going to go into bank recommendations since banks change their accounts and fees frequently and the information would only be out of date soon after I post this. But do your research and pick some good ones.
Foreign Exchange Rates
You will generally get the best exchange rates by making local withdrawals from ATMs, rather than from exchange counters or banks. ATMs use the wholesale exchange rate, which is reserved only for large interbank exchanges. Credit cards purchases also exchange currency at the interbank exchange rate and, even though they add on additional fees of their own, these fees are still typically lower than those you pay to convert your own currency at exchange counters and banks. There are some credit cards which don’t charge foreign transaction fees, including a few that also offer good airline mileage rewards, such as the Chase Sapphire Preferred card, Capital One Venture Rewards card, and Barclaycard Arrival Plus World Elite MasterCard. Google “no foreign transaction fee credit cards” to find out what cards are available. You can call your credit card company and ask what fees will be applied to your credit card purchases.
Credit Cards vs Debit Cards
As mentioned above, credit cards also offer excellent exchange rates so you shouldn’t worry about using them for foreign purchases. If you have both no-foreign-transaction- fee debit cards and no-foreign-transaction-fee credit cards with you, which should you use for purchases? We normally use credit cards for all purchases that we can, since there is no additional cost to us and we can earn additional airline miles for spending on the credit card. Credit cards will generally be accepted at many more locations abroad than debit cards. We mainly use debit cards for getting money from ATMs.
What about Travelers’ Checks?
Travelers’ checks have pretty much been replaced by ATMs. The main reason we can see to carry travelers’ checks is as a secure backup source of funds if no ATMs are available or your ATM cards are stolen. If your travelers’checks are stolen along with your ATM cards you can still get them replaced within 24 hours or so and have some money to live on while you get your cards replaced. Another instance where travelers’ checks could potentially be useful is when you are trying to prove financial solvency at border crossings, since border officials favor cash as proof of funds. The exchange rates for travelers’ checks are not as good as ATMs and fewer and fewer places will accept travelers’ checks as direct payment for goods and services, so we are not super excited about carrying them ourselves and prefer to carry enough cash and a hidden ATM card instead. Another reason we don’t like them is they are bulky and easily damaged by moisture and rough handling. Also, should you experience a situation where all your cash and cards are stolen, if you have someone at home who can wire you money to cover your costs in the short term, that is another option. See below.
Opening a Foreign Bank Account
If you are planning to obtain a temporary resident or pensioner visa in your destination country, or if you are going to work for a local company, you will probably need to open a local bank account in your new country of residence. Increased regulatory rules required by FATCA have made it more difficult for US citizens living in other countries to obtain foreign bank accounts, particularly in some countries. The banks which will allow you to open a bank account with only a US passport may require additional proof that you are living in the country, such as providing rent and utility bill receipts. This can be a catch-22 situation with landlord contracts requiring that you have a bank account before they will rent to you. You may have to go through several banks until you find one which is more expat-friendly. We haven’t had to deal with this situation ourselves, but our daughter had to set up a bank account in Spain when she was living there and she was able to negotiate it without too much trouble. She did have to provide proof of her lodgings as mentioned above, but since she had pre-arranged to rent a room from a friend before she arrived she didn’t have a problem renting without a bank account.
Imagine you find yourself in a situation where all your money, credit and debit cards have been stolen, along with all your IDs and passport. How can you get money to live on quickly? Refer to this post for information