Do You Need a Bank Account Where You Live?
Picture a couple named Ingrid and Carl who have just rented an apartment abroad. The landlord asks them to pay the rent by bank transfer, from a local account, on the first of each month.
They have a home bank account and a card with no foreign fee, so for the first month they try sending the rent from home. The bank charges $35 for an international transfer, and the exchange rate it uses carries a margin of about 2 percent. On $1,500 of rent, that margin is $30. They pay $65 to send $1,500.
At that rate, it is $780 a year to send the same rent every month.
They find out what a local account takes. At the first bank, they need a residence card, which they do not have yet. At a second, an online bank, they need a passport and a proof of address, and the rental contract counts. They open it in a morning.
With the local account, the rent moves by local transfer at no charge. They get a local debit card for the corner shop and the bus. The utilities come out by direct debit, in the local currency, on the date the bill is due.
They keep the home account for savings and the no-fee card for larger purchases. The local account holds about three months of local bills, and each month they send a fixed amount from home to refill it. A fixed amount on a schedule means they do not have to guess where the exchange rate is going.
You might say a second account is a nuisance. It is. It has to be watched too. Some banks charge a monthly fee or ask for a minimum balance. In some countries a foreigner cannot open an account without a residence card. The first branch may not speak English. Before they apply, Ingrid and Carl ask each bank four questions: what documents do you need, what is the monthly fee, what is the minimum balance, and does the online banking come in a language we read?
Many countries expect residents to report accounts held abroad, and the rules can run both ways. An account in the new country may need reporting to the old one, and the other way around. The rules differ from place to place, and it is worth reading both sets.
You could list the payments you will make in the local currency, such as rent, utilities and a phone plan. Then you could ask what it costs to pay each one from home, and what it would cost from a local account.
The 3 percent that our calculator charges when dollars are changed into local money is partly this cost. A local account is one way to pay it less often.
How did you pay your first month of rent abroad, and what would you do differently? Tell us in the comments. Someone reading may be about to send theirs.
Tell us in the comments