Whether you’re already a seasoned expatriate or you’re just dipping your toes in expat waters and contemplating your relocation options, you’re likely to come across lots of adverts all over the internet for international bank accounts as soon as you start Googling for information about living abroad.
This may lead you to thinking that establishing an offshore bank account is essential if you’re moving overseas, or it may just add another concern to an already long list that you’re worrying about as you plan your move abroad. However, fear not, when it comes to banking for expats things are relatively simple.
In this report into the truth about whether expats need international bank accounts and how they can (or cannot) benefit you as an individual, we will cut through the corporate speak and marketing pressures, and deliver you the plain facts about how expats can and should manage their money once they relocate abroad.
What Are International Bank Accounts?
All the main high street banking players offer expats international bank accounts. These are also referred to as offshore bank accounts because the offshore arms of these banking institutions manage them.
Typically all these high street banks like Lloyds TSB, Barclays, HSBC etc., have offices in the likes of the Isle of Man or the Channel Islands, and it’s through these centres that expats’ international accounts are managed.
So, upon closer inspection do these so-called international accounts offer expats anything more than their current current account? Well, yes and no! It depends on the account structure under scrutiny.
In general terms an international account is simply one slightly better designed for those who move, use, earn or spend their money abroad. The simplest structures are nothing much more than a current account; the more complex accounts can encompass multicurrency requirements and options.
Do Expats Need An International Bank Account?
Some expats can benefit greatly from an international bank account – but you don’t have to have one.
We have heard tales from expats who’ve been placed under pressure by their bank to switch to an international account once they move abroad. Typically these offshore accounts are fee paying rather than free like a previously held onshore current account. So perhaps one can guess why some expats are placed under pressure to switch by some banks!
As a result we are always sceptical when pressure is applied to anyone in their decision making about whether or not an international account is right for them. If your bank is pressuring you perhaps it’s time to switch bank – but that doesn’t necessarily mean you have to switch to an international account!
You need to understand the benefits that an international bank account can offer you – and then, depending on your own money management requirements, you can determine whether you would get more from an offshore account than an onshore one.
The Lloyds TSB international account currently offers fee free transfers with the additional benefit of worldwide travel insurance for customers for example. If you regularly transfer money between countries, currencies and accounts - and if you travel outside your new country of residence too - such an account may indeed offer you financial advantages as a result.
Other banks offer their customers the ability to bank in multiple currencies and manage all this through one simple interface. This is a benefit to those who perhaps earn a salary in one currency, live in a country where they use another currency, and who perhaps have obligations in other nations and other currencies.
Naturally enough, if you handle multiple currencies in your daily life like this, a multi currency international account may make sense.
Ultimately these expat-orientated international account options are all about offering maximum flexibility.
So, if you require a level of flexibility in terms of international movement and handling of your cash, consider an international bank account. They do make sense for a lot of expats.
However, if you’re moving abroad lock, stock and barrel and every aspect of your new life will be centred on your new nation – from where you earn your money to which currency you spend it in – you may have no need whatsoever for an international account.
For those who make a one off or very infrequent international transfer of funds, it can make sense to utilise the services of a currency broker for the transfer instead of having an international bank account that offers you the option fee-free but for a regular account fee.
Alternative Banking Options For Expats
If you don’t have an international account you can retain your current account onshore in the UK, and/or open a new current account in your new country as alternative ways for managing your cash.
Opening a local account in your new nation makes a lot of sense for the vast majority of people – whether or not they also have an international account. Without a local bank account you may not be able to pay for utilities and services, and you may not even be able to receive a locally earned salary.
It may make no sense for you to remit all your wealth to your new nation however, and there could even be taxation benefits for keeping your cash out of your new country of residence. This will depend on your tax status and the local tax rules where you’re living among other things, and personal advice should be taken.
So, if you don’t bring all your wealth onshore to your new nation, should you retain it in the UK? A lot of expats find great benefit in retaining a bank account in the UK – they can use it when they are ‘back home,’ they can maintain a credit reference facility in their old nation in case they ever want to repatriate, and most current accounts are free so there’s little sense in closing them.
However, it doesn’t necessarily make any sense to keep invested wealth in the UK if you’re now living abroad. Discussing this further goes beyond the remit of this report, so all we will say is that if you’re living abroad you should take an international attitude to the investment of your money! To that end, seeking appropriate international and independent financial advice is recommended.
It can make sense for British expats to retain a bank account in the UK as long as they are not interested in cutting all ties with Britain, (in a bid to change their nation of domicile for tax reasons for example). It will also almost certainly make sense for the vast majority of expats to open an account locally in their new nation of residence.
These are decisions and actions that can be taken immediately and easily as soon as you decide to relocate…
On top of all of this, it can make sense in the longer-term for those expats who have international money management and movement requirements to open an offshore bank account. However, don’t feel under pressure to get your account in place before you move, or to move your onshore current account to an offshore one.
Take time to research your options and ensure that you really will utilise all the flexibility benefits of an international bank account before committing to one.