Guide to Managing Savings Abroad

Last updated: 1 August, 2017

Almost everything you need to know about managing your savings from overseas*

*You’re on your own for dealing with the guilt from buying those designer shoes. 

To manage your savings account from overseas:

  1. Use OFX to save substantially on high bank margins and fees when you move your savings abroad.
  2. While opening a new account overseas, try to retain your existing savings account to pay any future bills or collect revenue in the local currency.
  3. Consider changing the address on existing account to that of a trusted family member or friend.
  4. Set up online banking to receive important information, such as statements, in your inbox.
  5. Consider turning off 2-step verification until you get a new mobile number abroad.
  6. Sign up for market updates or use a rate alert to determine the best time to transfer your savings overseas.

In this guide, you will learn:

managing savings

How can you move your savings abroad?

Using a bank to transfer your savings between your overseas and domestic accounts can be costly. Because you are both the receiver and the sender, you can be hit with both outgoing fees and incoming fees.

 

International fees are typically higher than domestic transfer fees, and fees can differ based upon how you initiate your transfers (online, by phone, or at a local branch).

 

On top of fees, banks will also charge a margin on the exchange rate of about 5%, and you may even be charged a conversion fee, further adding to the costs of your transfers.

 

Making timely moves and limiting your risks will be crucial when managing your savings from abroad. The following tips can help ensure you will make the right decisions for your financial security and stability.

  1. Check currency rates: You can use OFX’s currency converter to check the value of your currency versus the foreign currency in your overseas bank account. This converter will give you the most recent Market Rate (also known as the Interbank Rate), which is the rate that banks use when they trade currencies with one another.  

  2. Open an account with OFX: Transferring money with a bank may be your most expensive option. Fees and charges will quickly add up if you are regularly making deposits and withdrawals. On the other hand, with OFX, you get a competitive exchange rate, and we charge no fees. Our 24/7 customer support lets you transfer your money on your schedule, and our local banking network processing means your money often moves faster.

  3. Set your target exchange rate with a Limit Order: By using an online transfer service like OFX, you can move your money whenever you want to. A Limit Order lets you set your target exchange rate, so you can capitalize on a profitable market movement even while you’re out playing golf.

  4. Lock in an exchange rate with a Forward Contract: With OFX’s Forward Contract, you can lock in your preferred exchange rate and then transfer your money anywhere from two days to 12 months later. Protect yourself against exchange rate fluctuations, so you can keep more control over your money.

  5. Set up recurring payments: Whether you need to make recurring transfers to pay thinks like your mortgage, or you want to send money abroad to boost your savings, you can use OFX to set up automatic transfers on a schedule that works for you.

managing savings

What are the benefits of keeping a savings account overseas?

  • Diversifying your portfolio and reducing risk. If you have an overseas bank account in a foreign currency, you have automatically diversified your assets. Additionally you may be able to diversify your investment portfolio, as well as protect your purchasing power.  

  • Getting a better interest rate on your savings. When interest rates on savings take a tumble or stagnate at your local bank, your overseas savings account could help you gain access to higher rates, giving you a better return on your money.

  • Having protection when being sued. If you were to ever find yourself in a lawsuit, your overseas bank account might be out of reach, which means some of your assets might be protected even if you lose your case.

  • Reducing the tax on interest earned. Depending upon the tax laws in your country of residence, you may not have to report the money in your overseas savings account or the interest earnings on that account. Always consult with a tax expert to be absolutely sure that you are correctly filing your income taxes each year while saving the most money possible.  

  • Reducing the risk of losing your savings as a result of government instability.  In the unlikely event that a government attempts to place capital controls on your money, an overseas account may prevent the government from freezing, devaluing, or confiscating a portion of your savings.

managing savings

How can you open a bank account abroad?

To open a bank account abroad, you will need to provide the new bank with your personal information, along with copies of identification documents, some of which may need to be notarized or certified depending on the kind of account your want to open. You will usually need to verify where you live, so you will need a proof of address.

 

If you’re relocating to a developing nation, be sure you choose a reputable bank. To be certain that you are dealing with a safe and secure bank, make sure that it has what is known as tier 1 capital, or a minimum of 10% core capital ratio. Put simply, the higher a bank’s capital standing, the more secure your savings will be, regardless of where in the world that bank is located.

 

In an effort to discourage illegal activities like tax fraud and money laundering, you may be asked to provide financial reference documents from the bank that you are currently using. These documents might include a few months’ worth of bank statements.

Once your new bank account is up and running, you can use OFX to transfer your savings abroad to your new account swiftly, securely, and affordably.

 

Are you ready to start managing your savings from overseas?

Opening and managing an overseas bank account could provide you with a host of benefits, even if you only invest a small amount of money when you first get started. Whether you work abroad, own international real estate, or plan on moving to another country, having multiple bank accounts available could give you more control over your money no matter where you go.

Sources:

  1. http://www.internationalman.com/articles/offshore-banking  
  2. https://www.expatinfodesk.com/expat-guide/nationality-specific-information/americans/banking-and-investments/
    3.