Ask The Expat
How to Make Your Dollars Last Abroad
Among the biggest challenges for expatriates is managing their finances while living overseas. They have to deal with the everchanging exchange rate, inflation, varying interest rates, and unfamiliar banking rules. In addition,
economists predict that the U.S. dollar will remain low against the world’s major currencies for several years to come, which makes it even more important to manage your funds wisely if you plan on living overseas.
For short overseas stays up to six months, there is little you can do to maximize your purchasing power. With thousands of ATMs in almost every corner of the globe, the most economical way to get money while living overseas
for a short time is to use your check or debit card, drawing funds directly from your U.S. account. Mastercard/Eurocard/Cirrus, Maestro, Visa/Plus, Visa Electron, and American Express cards are accepted at almost every ATM around the world. Compared
to exchanging cash, ATM withdrawals have the advantage that you can withdraw funds 24 hours a day at most locations and you may get a better exchange rate than for cash (though that really varies country-by-country as the dollar is valued as a stable currency). Debit cards (check cards) with the Visa or Mastercard logo can also be
used for purchases just like credit cards, but they don’t generally offer the same purchase protection against theft or fraud. On the other hand, most U.S. credit card companies charge a small percentage for overseas purchases, which can start to really add
up for large purchases or a long-term overseas stay.
In case your bankcard is lost or stolen, traveler’s checks are a good backup, but the exchange rate is not as good, they are used and accepted far less than in the past, and you pay a fee for their purchase. If you exchange cash or traveler’s checks regularly, keep
in mind that banks and exchange houses charge a commission for exchanging currency. Exchange houses are often difficult to find in remote locations, therefore I urge you to always carry some cash on your hidden in 1 or more locations of your clothing. Money wires from home are another backup solution, but bank transfer fees are quite high and can be time-consuming to perform. Money
transfer services such as Western Union offer money transfers for a lower fee, with agent locations worldwide for convenient pickup of funds (usually paid out in the local currency). As a general rule, avoid changing money on the street if you are not an experienced traveler or expatriate. You
may get a better rate, but you are taking the risk of being ripped off if the area is unfamiliar. Experienced travelers or expats often will learn who they can trust to make such currency exhanges on the streets. Always familiarize yourself with the look of the local currency and avoid accepting a huge wad of small bills. They could contain outdated or fake bills.
If you are going overseas for an extended period of time, up to a year or longer, making informed financial decisions can save you a lot of money. Research the financial policies of your host country, and find out how stable
the economy and the currency are. Has there been a large-scale devaluation of the currency, or has there been a high rate of inflation? How stable is the currency against the U.S. dollar and other major currencies? If the country has economic
or financial problems, keeping large amounts of money in the local currency may not be a good idea. The more you know about the local banking system’s rules and regulations, the easier it will be to make the right choices for your financial
needs abroad. If you have overseas income or a stipend, it makes sense to open a local bank account. Your money is safer at a bank, and you can easily access your funds at bank machines. If you depend on savings in the U.S. during your stay abroad,
you might want to consider transferring some of your money to a local bank account. You may earn a much higher interest rate than in the U.S., and if the local currency is stable you can expect it to stay strong against the weakening dollar,
which will also save you money in the long run.
Some countries have liberal banking policies to invite foreign investments regardless of immigration status, and they freely issue tax identification cards to foreigners and allow them to open bank accounts. Most countries,
however, require a permanent or temporary residency permit in addition to a tax identification card and proof of address to open a local bank account. This could be a student, missionary, retirement, employment or volunteer visa, for example.
Once you have decided to open a bank account in your host country, find out how much banks charge for checks, overdrawn amounts, ATM withdrawals, etc. Some banks in developing countries and tax havens offer savings accounts in foreign currencies,
including ATM withdrawals in U.S. dollars.
For More Info
Sample Worldwide Banks
- HSBC Bank (The Hong Kong and Shanghai Banking Corp. Ltd)
- Lloyds TSB International
- BNP Parisbas
- UBS AG
- Banco Santander
- Bank of America
- JPMorgan Chase
Top Banks in the World in Assets (many of these are purely investment banks and do not offer retail services worldwide)
The following are general resources that may help you manage your money overseas:
ATM's Around the World
American Express ATM Locator lists ATMs around the world where American Express cards are accepted.
Mastercard/Maestro/Cirrus Global ATM Locator, provides Mastercard/Maestro/Cirrus ATM locations for most countries.
Visa/Plus Global ATM Locator lists Visa/Plus Automated Teller Machines in most countries worldwide.
Payment Transfer Methods
Paypal, www.paypal.com, allows you to send Internet money transfers to 190 countries and regions and send, receive, and withdraw in many others.
Western Union allows you tosend money abroad for pickup at worldwide Western Union agents. Internet money transfers are also available for some countries. Large fee per transaction.
See Money Matters Abroad section for more articles and resources.