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Top Tips for Expat Banking and Finances

One of the most important parts of expat banking and finances is being able to access your funds, whether in local currency or U.S. dollars, easily and inexpensively. Being able to navigate the local banking system, using the ATMs, and understanding fees and potential issues that may arise while using debit and/or credit cards can reduce stress and save money and time.

Learning the ins and outs of the banking system in your chosen tropical location is as important as discovering other nuances of expat living. Making a checklist that includes information about local banks is a great way to prepare for some of the challenges that may lie ahead.

banking and finances

B Rosen

Understanding the Differences in Expat Banking and Finances

For recent expats (and even those who have been living abroad for a while) dealing with foreign banking systems and how they interact with U.S. banks can still present a variety of challenges. Below are some key points to keep in mind:

Different Banks Have Different Rules

Unlike the U.S., banks throughout Latin America often have different requirements, even within the same country, for foreigners seeking to use their services. Some institutions will only do transactions in local currency; others may not have online bill paying capabilities for such things as utilities, etc. Even business hours may vary; the traditional “banker’s hours” certainly are different in paradise.

Opening a Bank Account Abroad May Not Be So Easy

With the recent passage of the Foreign Account Tax Compliance Act (FATCA), many banks in Latin America are refusing to deal with U.S. passport holders. The reason? With the complicated reporting requirements to the IRS and potential penalties for not reporting, local banks have found it easier just to avoid the problem altogether by not doing business with expats.

Increased concerns involving illegal activities, as reflected in tighter AML (Anti Money Laundering) rules and, of course, the Patriot Act, have also impacted the ability of expats abroad to open local accounts. This is a trend that can be expected to continue to increase for the foreseeable future.

Even those banks that still will permit foreigners to open accounts often mandate massive initial deposits, proof of residency, and other requirements that many new expats, frankly, are unable to meet. As a result, new arrivals in paradise may have to rely on their banks back home as a source for their funds.

banking and finances

Think Panama

All ATMs Are Not Created Equal

As is the case in the U.S., the fees charged by the owners/operators of ATMs for withdrawing cash can vary greatly. In addition, many ATMs only use Spanish for their language option.  For those who do not understand or speak the language, this could also result in confusion and create potential problems.

Not all ATMs will have the option of receiving your cash in either U.S. or local currency. Before completing a transaction, make certain that the cash that you will receive is in the currency you were expecting.

Beyond any local fees that local institutions may charge for using their machines (again, not dissimilar to the U.S.), there will be exchange rate fees and transaction fees from your home institution as well. Comparing the various rates banks charge for purchases and cash withdrawals can help you choose an option that can save you money in your new expat life.

ATM Versus Debit Cards

There are differences between ATMs and Debit cards that can impact their usefulness abroad. Generally speaking, Debit cards will have a VISA or MasterCard logo on them and can be used for purchases as well as cash withdrawals; ATM cards are more limited and primarily are used for accessing funds in checking or savings accounts. Inquiring with your institution to see if you can have both issued can be another tool to maximizing your account options.

banking and finances

Think Panama

Problems Involving Expat Banking and Finances (and How to Prevent Them)

There are few things more traumatic to expats building a new life in their chosen tropical paradise than to abruptly discover that they can’t get to their money. Below are some of the most common problems and ways of preventing (or limiting) their impact:

I Can’t Find an ATM That Will Accept My Card

If your home institution is part of the PLUS or Cirrus networks, finding an ATM that is part of those networks should be easy; over 135 countries participate in those programs. If you have trouble finding a local ATM that is a member, there are online directories that can provide the locations of compliant machines.

My PIN Number Doesn’t Work

Many foreign banks will only accept PIN numbers that are four digits long and numeric. If your PIN is longer than four digits, or has letters and/or symbols, consider changing it before you depart for your tropical destination. This simple precaution can prevent a lot of undue worry.

My Card Is Blocked

This scenario is becoming more frequent as international fraud has increased. Unfortunately, banks are not required to notify their customers that a block has been put on, the result being that the first time you may learn of this situation is when your transaction is declined. The best way to limit the impact of this problem is to have more than one option for accessing your cash; having two or more accounts (savings, checking, credit, etc.) will permit you to get to your funds from a different source until the blockage issue can be resolved.

A second preventative measure is to have a travel advisory placed on your account(s) before you go so that your bank/credit union doesn’t think that a fraud is being attempted. Additionally, keep your bank’s contact information readily available in case a question arises; many institutions have online access as well as phone services that are available 24/7/365.

My Card Was Lost or Stolen

Immediately contact the issuing bank and advise them of the situation. Find out from them what their best recommendations are for replacing your card and accessing your funds in the interim. If an Internet site is available, monitor all activity on your account and report anything suspicious.

Final Thoughts

Learning the best methods of getting to your money after arriving in your chosen expat destination may seem daunting but, in truth, it’s only another part of adapting to your new tropical lifestyle. Take the time to examine your banking options, both local and with your current financial institutions, as you prepare for your overseas adventure. Your efforts today can make your tomorrows far less stressful.

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