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Whether you're traveling abroad temporarily or planning to put roots down in a foreign country, you're probably going to need money along the way. The right option for you depends on how long you plan to be abroad. Before you pack your bags, you might want to consider the best bank accounts for people living and working in another country.
Things to Consider if You're Only Abroad Temporarily
There are lots of reasons to move to another country for a bit, from studying abroad to relocating for work. Perhaps you simply want to experience another culture for a short time. No matter what brings you to a foreign land, your bank account back home might work fine if you're only there temporarily. The task then becomes finding the right bank.
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How to Choose the Right Bank for Overseas Transactions
While preparing for your departure, ask the following questions of your stateside bank:
- Are there foreign transaction fees? Some banks charge a foreign transaction fee if you swipe your debit or credit card outside of the U.S. It may also apply to online purchases made in a foreign currency. The fee can vary but is typically 2% to 3% of the transaction amount, which can add up quickly if you're using your cards regularly. The good news is that not all banks charge foreign transaction fees.
- Is there a large ATM network? The answer may impact your ability to withdraw cash while living abroad. Some banks may charge international ATM fees. If your bank charges a foreign transaction fee, you can expect that to be tacked on as well. Some banks may offer to reimburse you for ATM fees you pay while abroad.
- Is there a monthly service fee or minimum account balance? These are always good questions to ask, even if you aren't leaving the country. Some checking accounts charge monthly maintenance or service fees. You might also be hit with a fee if your account balance falls below a certain amount. However, this isn't true of all checking accounts.
Top Banks for Living Abroad Temporarily
Chime
Chime is a financial technology (fintech) company, not a bank, but it partners with banks to provide regular banking services. That includes a free checking account and debit card. There are no minimum monthly balance requirements, monthly service fees or foreign transaction fees with Chime. Account holders also have access to a network of over 60,000 international ATMs. However, there is a $2.50 fee for using an out-of-network ATM if you're unable to find one abroad that's in the Chime network.
Charles Schwab Bank
Travelers who open an investor checking account with Schwab can unlock a number of perks. There are no foreign transaction fees or account minimums, and you can expect unlimited ATM fee reimbursements. Account holders also earn interest on the account, which is 0.45% at the time of this writing. It's important to note that this account does require opening a Schwab brokerage account, but there are no account or trade minimums.
Capital One
With a Capital One 360 checking account, you won't have to worry about monthly service fees, foreign transaction fees or ATM fees. Your money will also earn interest. At the time of this writing, the APY is 0.10%.
Things to Consider if You're Living Abroad Long Term
Living abroad for longer periods of time, such as for a permanent job relocation, requires different financial considerations. In some cases, it may make more sense to close your U.S.-based accounts and open new ones in your new country. Here are some things to consider if you'll be living abroad for the long haul.
Opening Foreign Bank Accounts
Once you establish a permanent address in your new country, opening a foreign bank account can simplify your finances. For example, if you're working and getting paid in the local currency, having a bank account there means you won't have to convert your income to U.S. dollars. It can also streamline your ability to save and invest while living abroad.
Continuing to Save for Retirement
If you have an old 401(k) in the United States, you can leave it where it is or roll it into an individual retirement account (IRA) until you reach retirement age. Transferring the balance into a foreign retirement account will likely count as a taxable distribution. You'll also be hit with a 10% early withdrawal penalty if you're under 59½. Be sure to learn about the best ways to save for retirement in your new country.
Understanding Your U.S. Tax Obligations
If your earned income is within the IRS requirements, you'll likely have to file a U.S. tax return while living abroad. That's because U.S. citizens are taxed on worldwide income. The foreign earned income exclusion can help cushion the blow. In 2023, it allows eligible taxpayers to exclude up to $120,000 from their taxable income. Some housing expenses may be tax-deductible too.
One other thing: If you have foreign bank accounts and their total value exceeds $10,000 at any point, you're obligated to report that money to the IRS. That includes foreign investment accounts.
The Bottom Line
Moving abroad is exciting—whether it's for a few months, several years or permanently. Banking in another country doesn't have to be complicated. It comes down to understanding your needs, then selecting the bank that can best serve them. Just be sure to compare fees and accessibility before making a decision.
You might consider taking protective measures while you're abroad to help prevent identity theft. For example, you have the right to freeze your credit anytime, including while you're overseas. Meanwhile, free credit monitoring with Experian can alert you to any new information that finds its way onto your credit report so you can take steps to protect your credit even when you're abroad.