Here at Q Wealth we often receive emails and calls from people who are confused about how to manage their finances once they become expats or non-residents. I’m not talking so much about tax preparation or returns, but rather about the practical aspects of banking across borders.
For example: Do you need an offshore bank account? What is the difference between a multi-currency account and multiple currency accounts? Should I keep my money in the country where I am living? Can I still access my online brokerage account from overseas? These are all typical questions we are asked, and I will answer these and more in this article.
Let’s make up two typical composite characters, Bill and Mary Expat, who are retiring early abroad and planning to travel frequently. To make things easy, let’s say they are American. They have decided they cayman phone numbers like the laid-back lifestyle of Latin America, but they are still wavering between retiring in one of the more popular expat havens like San Miguel de Allende in Mexico, or Bocas del Toro in Panama… or maybe they would like to go to a more exotic, adventerous place like Columbia or Brazil. They don’t know yet. Either way, getting there is half the fun, and Bill and Mary are determined to enjoy the journey. For the moment, they are going to up stumps and travel!
Bank Accounts and ATM Cash Withdrawals
Bill and Mary are starting out on their journey with a few accounts at banks in their home country, the USA. Like most couples, they have a couple of joint checking accounts, a savings account, a credit union account and a few credit cards.
It’s certainly worth keeping these home country accounts. US checks are still useful in many Latin American countries, where they can be cashed at the friendly neighborhood casa de cambio. This is a good way to access cash for things like daily living expenses or home improvements. Typically the casas de cambio give a better rate of exchange than ATM machines without charging any fees, and without being subject to daily limits. But of course, before they will cash checks for you on the spot, they must know you. It is best to referred by an existing client, so ask around the “expat experts” in your chosen area.
US bank accounts will also be useful for paying bills at home. Regular bills like insurance payments may be debited automatically, while one-off bills might be best paid by mailing a check. Regular income like social security checks can be direct deposited into the US checking account.
Many people don’t even know they have daily cash withdrawal or spending limits on their ATM or credit cards until the day they urgently need a reasonably large amount of money. Scared of building up a large amount of cash at home, they wait until the last minute to withdraw funds, assuming that because they have the money in their account, they can withdraw it using their debit cards.
Big mistake! They have to pay their builders in cash and the cash dispenser refuses to spit out the money. In addition to that, many countries have just one or two ATM networks and these networks automatically impose their own daily limits.
It’s important to understand in this respect that there are actually three different types of daily limits you must contend with:
o Daily cash withdrawal limit imposed by the bank that issues the card
o Daily purchase limit imposed by the bank that issues the card – this applies to non-cash purchases, where you sign a card purchase voucher in a retailer.
o Daily cash withdrawal limit imposed by the ATM network owner – this limit is not set by your bank, but by the owner of the actual cash machine where you are conducting the transaction.
That is to say, you can ask the bank that issues your card for a permanent or temporary increase in your cash withdrawal limit. They might set it at $50,000 a day. But most ATMs don’t pay out more than about $500 in one transaction. In this case as far as your card issuer is concerned, you could do 100 transactions of $500 each per day, before you hit their limit.
ATM network owners set their own limits, for a variety of reasons. In Brazil, for example, things are particularly difficult. Withdrawals at night are limited to 50 reals, whereas a taxi across Sao Paulo can easily cost 150 reals. So if you are arriving in Sao Paulo on the red-eye flight, be sure to bring cash and don’t rely on local ATM networks! Argentina and other countries place similar restrictions on ATM withdrawals.