Should you open a foreign bank account or should you not bother? What may be the reasons for establishing a bank account abroad? Is it easy or is it difficult to set one up? Is it going to be an additional cost or are there going to be financial gains for you if you open an account with a foreign bank? Some of these questions may not be so easy to answer but let us dwell on the issue of setting up a personal bank account abroad and see if this endeavor would make good sense.
If you do not have much money and if you do not ever leave your home country, you should not probably bother to set up a foreign bank account. However, if you have some money laid aside and if you go to foreign countries on vacation or for business purposes, you definitely should consider establishing an account in a foreign bank and here is why.
Reasons to open a foreign bank account
- You have heard about asset diversification, have you not? Everybody is talking about it! Why are we advised to diversify our assets? Because the world has become highly unstable and you never know what can happen in your home country. National governments fail, civil unrests occur, deadly viruses attack the planet… If you have all your money in one place, you, therefore, have a chance to lose ALL your money in one go (there was something about the eggs and the basket…). If you keep parts of your capital in different geographical places, all these places have to collapse at once if you are to go totally bankrupt. The occurrence of such a situation is highly improbable.
- A foreign bank account usually means an account in a different currency (or it should mean an account in a different currency). National currencies fluctuate and if you keep all your money in one of them, you may find yourself much poorer than before even without doing anything to bring about this sort of situation! Remember how much the British pound fell against the background of the Brexit initiative? It has picked up since then but that political decision made a number of people nervous about their decreased net worth. Through no fault of their own! And what about the situation with the presidential elections in the USA? How is it going to affect the dollar rates? It is hard to judge indeed. Thus, having several accounts in several national currencies will let you feel much safer.
- Bank accounts in most countries are insured but the insurance amounts are quite different. Some deposits are insured for less than 10,000 euros while others (like in Switzerland, for example) are insured for 100,000 Swiss francs. Any bank can go bankrupt (probably with the exception of a Swiss bank) and if it does, you will have to be content with whatever insurance amount you will be paid. When you put a hundred thousand in the bank and you can get only ten thousand back when the bank collapses, you are going to feel very sorry about not looking ahead earlier.
- If you choose the foreign country where you want to open a bank account with care, you may find one that offers some serious tax advantages too. There are jurisdictions where the capital gains tax is quite low or not allied at all. Please seek our advice on banking offshore: we know a lot about the issue!
- Speaking about the capital gains, a foreign bank account may let you have more of those. First, there are countries where bank interests are comparatively high. It is true, however, that such countries cannot be called highly reliable. If you do not want to take risks, you still can earn money by getting services from a foreign bank. Swiss banks, for instance, provide for an opportunity to open investment accounts with them. The Swiss are famous in the world for their investment skills and you can have a stable passive income in a hard currency without having to worry about the security of your investments.
- If you are a skilled investor yourself, you can also use your foreign bank account to make investments in a foreign jurisdiction. Sometimes you can bring money from anywhere in the world if you want to join a group of investors in a foreign country. But this opportunity does not always exist. For instance, it is not advisable to try to use your bank account in a Latin American country to make investments in Asia. Asian banks are highly cautious in their dealings with Latin American banks so you had better set up an account in Singapore or Hong Kong if you want to invest in an Asian country.
- Obviously, if you travel to a certain foreign country on a regular basis (you have business partners there or you simply like the nature in the country), establishing a bank account in this country would be a very good idea. This is especially true if you have some financial obligations in the foreign country. For instance, international roaming can be quite expensive with some mobile phone operators and when you come, say, to Spain, using a Spanish SIM card is going to be much more economical. Now, if you have an account with a Spanish bank, you can use the automatic payment opportunity and never worry about your phone bill.
- Now suppose that you like the frequently visited country so much that you develop an inclination to buy a house or an apartment there where you can stay on your long visits to the country. The only way to obtain a mortgage would be to set up an account with a local bank. In this case, a foreign bank account is not just a nice side bonus but an unavoidable requirement. Besides, not only a mortgage but other types of bank loans will be available to you if you set up a bank account in a foreign country.
- There are also cashback programs and other suchlike bonus programs that banks offer to their clients. While you are shopping at home, these programs work fine and you are enjoying the perks. But when you take your bankcard abroad and use it there to pay for goods and services, there is going to be no cashback for you! If you want to have some of your shopping money back, you need to establish a bank account in the foreign country and use the card that it issues to you while you are there.
- Similarly, if you are a frequent visitor to a foreign state, you may need some medical care (we certainly wish you good health!) while you are there. If your home country imposes financial control, you may have trouble covering the costs of the medical care. Now, if you have a bank account in the country and some money in it, you are going to have no problems with that at all.
This list of reasons to open a foreign bank account presented above is not exhaustive at all. The truth is that anyone whose personal capital amount is above average and who travels to foreign countries must have a bank account or two abroad.
Opening a bank account abroad: what should you make a note of?
There are multiple banks in various countries of the world and some of them will look more attractive while others less so. Offshore Pro Group cooperates with over 200 banks and payment service providers and we will be delighted to help you choose the foreign bank that suits your personal and business purposes best of all. Here are some aspects in which banks are a bit different and thus you have to take them into consideration when choosing where to open a foreign bank account:
- The spectrum of services that the bank offers and the banking products;
- The tariffs, fees, and commissions that the bank charges;
- The liquidity of the bank;
- The bank’s capitalization and stability;
- The level of political and economic stability in the country where the bank is located.
Opening a bank account abroad: main requirements
The process of foreign bank account opening is much more demanding than the process of setting up a bank account at home. A non-resident applicant for banking services is somewhat suspicious by definition these days. This is why you need professional assistance in the matter. Here is what you have to do:
- Request an individual consultation on selecting the jurisdiction and the bank;
- Collect the required application document package;
- Fill out the bank forms with our assistance;
- Submit the application for banking services;
- When your application is approved, acquire electronic access to your new foreign bank account and start using it the way you like.
The timeframes of foreign bank account opening vary between one day and two months. Opening an account with a payment system or with a neobank (a bank on an electronic platform) takes less time, while setting up an account with a traditional bank takes more time. Much will also depend on how well the application documents are completed as well as the ways of doing banking business in a particular jurisdiction and a particular bank.
How you can use the money in your foreign bank account
Most foreign banks issue Visa/MasterCard debit cards to their non-resident clients. Besides, all of them will have online platforms that you can use to make and receive payments. Due to the COVID-19 pandemic, the number of cashless transactions has doubled recently.
International efforts taken to combat money laundering and tax evasion are making it harder to open a foreign bank account. With our professional assistance, it is still possible, however.
A personal account in a foreign bank will bring many advantages to you. Probably, the most important of them all is the increased feeling of freedom and security. Please contact us by email email@example.com and request a consultation on opening a bank account abroad. We will be happy to see you among our clients.
Why should I open a foreign bank account?
There are many reasons to set up an account in a foreign bank. Some of them are purely economic while others are psychological ones.
How should I choose the foreign bank to set up an account with?
There are multiple aspects to be taken into consideration when setting up a foreign bank account. These include the minimum initial deposit requirements, the cost of services, the online account management opportunities, the political stability in the jurisdiction where the bank is located, and so on.
Is it difficult to set up a foreign bank account?
If you try doing it yourself, it is going to be difficult. If you apply for our assistance, you chances for success will increase. If you order our Preapproval service, the chances are going to be even greater (a preapproval is a provisional consent of the bank to provide services to the applicant).