If you’re an American moving overseas, be prepared. Along with concerns about language, housing and centigrade temperatures, there are myriad financial details you’ll need to sort out.
I was recently reminded of these hassles by my friend Melinda Murphy Hiemstra, who moved from New York to Singapore and was complaining about a daily dollar limit that Citibank imposes for online transfers to overseas accounts. The limit was making it difficult for Melinda and her husband to hold an apartment they wanted — so difficult that their real estate agent loaned them the deposit money.
As a perpetual nomad, I’ve had my share of such hassles. I lived in Hong Kong for more than seven years and, after a return home for a while, moved to Sydney for two years. I’ve also done shorter stints in France, Germany and mainland China.
When I was a student in Beijing, my greatest money concern was rationing cash. The currency wasn’t easily convertible and I didn’t want to be stuck with it when I left. In Sydney, credit cards were the issue. I couldn’t get one because I didn’t work for an Australian company. “They clearly don’t know who I AM,” I whispered to my husband when the banker told us the news. My wallet was heavy with American plastic and for years my mailbox had been flooded with preapproved credit card offers.
Then there are the little things: In Hong Kong, an ATM is called a “cash point.” In Sydney, debit goes by the acronym EFTPOS (Electronic Funds Transfer at Point of Sale). There are a lot of adjustments to make.
With that in mind, I conducted a very unscientific poll (I emailed a half-dozen friends who are or have been expatriates) to come up with tips for anyone moving abroad. Practices in each country vary, of course, but these seven tips cross national borders.
1. Open a local bank account ASAP.
Even if you’re working for an organization that pays your salary into an American account, if you’re going to stay in a new country for more than six months, you’ll probably want a bank in your new home. You’ll need local currency to pay rent and utilities at the very least. A local account also helps you fit in, something that’s hard enough to do, what with our accents and telltale footwear.
I opened an account at Commonwealth Bank of Australia several weeks before I left the U.S. That gave me plenty of time to transfer money from my Wells Fargo account, meaning I avoided the situation Melinda is in. My friend Beth Kane was also able to open a bank account in France prior to her relocation, though her path was eased by a French friend who co-signed on the account.
Not every financial institution offers this service. It’s a good idea to contact some banks well in advance of your move and find out what their requirements are.
2. Get a U.S. credit card that doesn’t impose international transaction fees.
Even with a local bank account, a U.S. card is helpful to have during your initial setup period, during trips home and maybe for purchases from websites that are restricted in other countries (those sites will usually need to be accessed through a service that provides you with a U.S. Internet Protocol address).
Credit card foreign transaction fees average around 3 percent, which can add up. Carolyn Robinson, a friend whose check for international development work is deposited into her U.S. bank account, says she has always considered the $80 a month she pays in foreign transaction and ATM fees to be a cost of doing business.
But it doesn’t have to be like that, especially these days. An increasing number of U.S. credit cards don’t charge foreign transaction fees. Ned Colt, who works for a relief organization in Jordan while his wife does the same in Germany, says they use a Capital One card with no transaction fees and no annual fees. “Most of our purchases are overseas purchases, so this saves us approximately $800 annually on foreign [transaction] fees,” Ned wrote in an email. “While our priority for a credit card is international acceptance without incurring foreign [transaction] charges, we also factor in whether the card is free of annual charges and provides either air miles or other incentives.”
3. Make sure your U.S. card can be used in your new country.
Beth has lived in France for six years and, finding French credit cards to be expensive, she relies on U.S. credit cards for many purchases. Still, Bank of America’s security practices leave her frustrated. “From time to time, I have to phone them to keep France as ‘OK’ for charges, even if I have already told them it’s to be a permanent ‘OK,'” she wrote in an email. “My other cards contact me if they question a charge but with B of A no, it’s me that has to make the call and often after an online transaction doesn’t go through (most notably [for] train tickets) and my cheap seat is gone!”
Contact your U.S. card issuer before you go and inform them of your move. Also, ask if you can get a card with an EMV chip. These chips have replaced magnetic stripes in Europe and many other places. While most cashiers can still swipe a magnetic-stripe, you may be unable to use self-pay kiosks without a chip card — irritating enough when you’re on vacation but a genuine career risk if you’re a resident trying to commute to work.
4. Consider a local credit card.
I wasn’t eligible for an Aussie credit card until I had lived in the country for a while and earned the trust of my bank. My husband was in a similar situation but he discovered that American Express would trade in his U.S. card for a local AmEx. (I didn’t do that because my AmEx was my oldest card and I didn’t want to lose all that U.S. credit history.)
A local credit card is helpful not only if you’re earning local currency (you’ll obviously be paying the bill with local currency), but also because the card may earn rewards that fit your needs better. For instance, my AmEx points could be used for Qantas flights but only on those that originated in the U.S. My husband’s Aussie AmEx earned points toward flights originating in Australia.
Still, don’t expect American-style rewards programs. I have not seen any country that is as credit card crazy as the U.S. And while that may be a good thing (our banker told us restraint in doling out credit cards was one reason Australia didn’t suffer a U.S.-style credit meltdown in recent years), it also means that your choice of rewards will probably be disappointing compared to what you can get here.
5. Don’t expect your credit history to follow you.
There is no global credit scoring scheme and methods for evaluating creditworthiness are different everywhere. That may very well mean you face the same kind of resistance to new credit applications as I did in Australia. It could also work in your favor if your credit is bad in the U.S. but dodging debts is never a good idea.
Mary Coe, an American friend who has lived in Australia for five years, found lending criteria to be different from the U.S., where having no credit history makes borrowing difficult. “When we applied for a mortgage here, it was not a good thing that we had a credit card,” she says. “It was treated as if we had maxed it out, even though we have always paid it off in full every month.” On the bright side, she and her husband qualified for perks given to first-time home buyers, even though they’d owned property in the U.S.
6. Forget about checks.
Even back in 1996 when I moved to Hong Kong, almost no one took checks. I paid my rent and bills via automatic debit from my bank account, and made most other large payments by bank transfer. That was not only more convenient for me, it was required by the payees.
The same was true in Australia, where I used fewer than 10 checks during my whole two-year stay. I never saw a shop that accepted checks, and when I split vacation costs with a friend, she asked me to deposit my half into her account.
Mary, who runs a book indexing business, has had the same experience. “I can’t remember the last time I got a cheque,” she wrote. “Most clients deposit directly into my account. And best of all, transfers go through the same day.”
7. Remember cash? You might need some of that.
Cash is still king in most parts of the world. Carolyn, who often works in post-conflict zones, knows this all too well. The non-governmental organizations she works with must sometimes use bonded courier services to deliver large sums of cash, which she has to convert and keep secure for payments to other contractors and facilities.
She’s gotten adept at working the local currency exchange scene. On her last contract in Libya, her hotel manager traded money for her at the black market rate. That rate eventually converged with the official rate, but she continued to exchange money though the manager for convenience.
Even in developed countries, cash is often surprisingly dominant. My friend Linda Takamine conducted doctoral research in Japan in 2009 and 2010. Japanese consumers have for years been able to use their mobile phones to pay for vending machine purchases, but cash rules for larger expenses. Linda paid for her housing in full in cash, drawing from around $10,000 in grant money she received in an envelope from a Japanese quasi-governmental organization.
“This is not uncommon,” she says. “Some places still pay their employees in cash. On Fridays — paydays — you can still see people lined up in banks with fat envelopes of cash. Japan is a low-crime place obviously or this wouldn’t work.”
Ned’s wife Cathy Robinson has learned not to rely on plastic when dining out in Berlin. A Canadian who has lived in Hong Kong, England, Pakistan and the U.S., she was surprised to learn that many German restaurants only take cash. “Friends who have visited have been caught out and have had to run to the bank machine while someone waited for them as hostage,” she says. “I usually do make sure I have more cash with me here compared to other places I’ve lived, just to be safe.”
Even with all the changes in payment and banking technology, a trip to the Geldautomat never hurt anyone.