Most millennials would jump at the opportunity to travel and work remotely for extended periods of time.
If you plan to spend more than a few weeks in another country at a time, you should strongly consider opening a bank account there to save money and avoid hassles.
Keep reading to get a complete overview of international bank accounts, including how to open one, why you should, and more.
Opening an international bank account: A step-by-step guide
Opening an international bank account isn’t hard. Here’s an overview of what you can expect.
- Understand your country’s exchange rate
- Check if you can use your existing bank
- Determine what features you need
- Select a bank
- Fund your account
1. Understand your country’s exchange rate
One of the first things you should do when considering a new country is learn about the exchange rate. This is going to determine how far your money goes. It’s also going to impact how much interest you collect, if any.
Some countries have very favorable exchange rates for the U.S. dollar, while others aren’t quite as good. Check out the specific rates at your destination country using the Wall Street Journal’s updated currency rankings and free converting tool.
2. Check if you can use your existing bank
Some banks offer international services with branches in foreign countries (more on that later). If this is the case, you may not have to switch banks at all, making life a lot easier.
For the most part, only large national banks have branches abroad. However, even if your bank doesn’t, it’s a good idea to check in with them before your trip.
For example, you may want to inform them that you plan to use your debit card to withdraw money internationally. Taking this step can reveal any potential fees you may encounter and ensures that your bank doesn’t flag your international charges as potentially fraudulent.
3. Determine what features you need
If you need to shop for a new international bank, make sure to get one that matches your specific needs.
A checking account provides quick access to capital without any monthly spending restrictions.
Most people don’t need a savings account abroad, but if you sign up for one, keep in mind that the IRS and the U.S. Treasury require Americans to report foreign accounts with more than $10,000 in them. You’ll need to declare these on your taxes and fill out FinCEN Form 114.
Traveling without cash is not advisable. Even if you use mobile pay and debit cards, you should always carry some cash or have access to cash when you need it. With that in mind, make sure the bank you sign up for has easy ATM access. Ideally, you can access cash throughout the country or region where you’re staying.
Mobile and online banking
You’re not always going to have access to a computer or physical bank branch. As such, you’ll want to work with a bank that offers high-quality mobile banking with a robust app.
Some international bank apps won’t be accessible from the U.S. App Store. Therefore, you may need to change your App Store location to the region where you now live to download your new bank’s app. This can get tricky if you rely on other apps or monthly subscription services that are only available in the U.S. App Store. One way to get around this is to get a second phone and new phone plan, which you might want to do anyway.
There is no reason to open up a new investment or brokerage account abroad (unless you are opening one with a United States-based provider). It’s just too complicated, and the United States has by far the best options in terms of online brokerage services. Serious investors would be wise to check with their particular brokerage firm, and possibly a tax advisor, to ensure compliance with the IRS and local tax agencies.
4. Select a bank
If you have the option to work with a global financial provider, this is probably your best bet. You’re more likely to avoid issues like language barriers, accessibility, and customer service complications.
Here’s a breakdown of some of the top global banks to consider.
HSBC, which stands for the Hongkong and Shanghai Banking Corporation, has a global footprint that extends across 65 countries and territories. Simply put, HSBC accounts are a top choice for international travelers.
What we like about HSBC: The bank offers stellar customer service and a solid online platform. The company also offers a special expat banking service, catering to people who prefer an international lifestyle.
Schwab is one of the most trusted and widely used investment platforms. For travelers, the firm offers expat accounts in the United Kingdom, France, Ireland, Sweden, Singapore, Thailand, and Malaysia, among other countries. You need a U.S. address to qualify.
What we like about Schwab: With the Schwab Visa Debit card, you can make everyday purchases in different currencies wherever Visa is accepted. Schwab also reimburses for international ATM fees.
Citibank International Personal Bank U.S.
Citibank offers international banking through the Citibank International Personal Bank U.S. service. Simply open a foreign account through Citi, transfer funds through the bank, and you’re good to go.
What we like about Citibank International: This service is backed by Citi, one of the biggest names in global finance. With thousands of international branch locations, Citibank is a top choice for multinational executives and corporate employees.
If you don’t have access to an international bank—and many of you won’t—don’t worry. Ask around and go with the most popular bank in that region, and you should be just fine.
Going back to the extended Florence trip: if you want to open a bank account in Italy, simply do a Google search for “best bank in Italy” and you’ll find a bunch of popular options.
5. Fund your account
Once your foreign bank account is up and running, the next step is to fund it with a wire transfer (unless you already deposited cash). This should be relatively simple, as it’s just a matter of connecting your existing bank with your new one.
Banks use two codes for making international wire transfers.
International bank account number (IBAN)
The IBAN is your bank account’s unique identifiable code. To access your IBAN number, look at your statement or your online portal (or ask a customer support agent for help if you’re confused).
Banks also use SWIFT codes for identifying and connecting with other global financial institutions. You can find your SWIFT code on your statements or by asking your bank.
Documents required to open a bank account in another country
Before your adventure begins, make sure to pack a few important documents
For starters, you’re going to need a passport and possibly a valid driver’s license or state identification card. If you go to the bank without these items, you’ll most likely have to come back with them to proceed.
Proof of residency
You’re also going to need to show where you live, both in your destination country and your prior address back home. Most likely, a piece of mail with your address will suffice, or your driver’s license or ID card.
Work or study visa
If you were issued a work or study visa for the country where you’re staying, make sure to bring it with you. It might already be affixed to your passport.
Proof of income
Most banks require new account holders to explain where their income comes from or if they have any, for compliance purposes. Bring proof of employment in the form of a paystub. It’s also a good idea to have access to your employment engagement letter if you have one (i.e., the offer letter you received when joining your current employer).
Proof of enrollment
If you’re a student, make sure you bring official proof of enrollment so that you can demonstrate you are actively taking classes. Having a valid student ID would be the most straightforward way to check off this box.
Money for a deposit
Finally, you’re going to need to fund your account. Some banks require a minimum opening deposit, even if it’s just $100. Ideally, you already have this on hand in the foreign currency for the country where the bank is located.
So if you just moved to Florence for a year, bring a few hundred euros in cash when you go to open your account.
As for exchanging money, the easiest way to do this is to just take cash out at an ATM in your destination country using your debit card from your old bank account. You may have to pay an ATM fee or foreign transaction fee, but hopefully it will just be a one-time thing since you’re opening a new account to avoid additional fees down the road.
The benefits of international banking
Here are some top reasons to set up an international bank account.
Most banks today don’t require you to visit their branch locations to make transactions. By opening an international bank account, it’s possible to access funds from anywhere in the world using an app or internet browser.
The process of getting a loan is going to go smoother if you already have an existing banking relationship. For example, suppose your work trip to Florence turns into a situation where you want to open a vineyard and live there permanently. Simply put, there will be fewer hoops to jump through when you apply for a loan if you already have a proven track record with an Italian bank.
Many large national banks in the United States charge hefty monthly fees and foreign transaction fees. You can avoid all of that nonsense by enrolling in a bank in your new country of residence. Just make sure to avoid fees with your new bank, too.
Are foreign investments taxable?
They might be. It depends on where you’re paying taxes, where you’re collecting money, and how much you’re investing, among other factors. Make sure to check with your tax advisor before making any significant foreign investments.
Can I access my checking account when traveling internationally?
Yes, you should be able to access your current checking account when traveling internationally. If you’re just going on vacation for a little while, you shouldn’t have to switch banks or open a dedicated account. Just watch out for foreign transaction fees and look for ways to avoid these.
When paying for normal travel expenses (e.g., hotels, rental cars, and dining), you’re probably better off using a top travel rewards credit card.
Do expats have trouble banking?
Recent advancements in global banking make it easy and affordable for expatriates to access basic banking services anywhere. That said, you shouldn’t have trouble accessing a bank account in another country as long as you can provide basic identification.
How can I avoid ATM fees when traveling?
The best way to avoid ATM fees when traveling is to use banks that abide by the Global ATM Alliance, a consortium of international banks that don’t charge access fees to customers.
Otherwise, watch out for ATM fees when traveling because they can be sky-high. This is yet another reason to use global banks or a provider that reimburses for ATM fees.
The Bottom Line
If you’re staying in another country for a few months or more, it’s a good idea to get an international bank account. There are countless options available, from HSBC to Barclays, and everything in between. You’ll also be just fine with an established local bank.
Look for a provider that offers a great mobile app and charges minimal or no fees. It also helps if they don’t require a high minimum balance, because after all, you may be moving back home soon.
From the mountains of New Zealand to the shores of Portugal, it’s a big world out there. Here’s to experiencing as many different countries as you can while making smart financial decisions along the way.