Banking
Banking
I am preparing to embark on my first posting as an international teacher and I am curious about how other teachers set up their banking situation. My school will pay in a combination of USD and the local currency (whichever combination I choose), but I am curious as to which bank is the best for lowest fees, ease of use and number of locations worldwide. I am also wondering if we should keep a USA credit card and if so, which one would be the best one? Of course I will get information from my the school as well, but I thought I would ask the community for answers as well.
Re: Banking
The easiest thing is to keep your current US accounts, credit cards and all. You'll need someplace to send your earnings every month, someplace to handle all your one and outs. If you have a bnch of credit cards, maybe close some so you're down to one or two only.
Also consider opening a Vanguard investment account and IRA. This gets close to impossible once you've left the US. even if you don't have money to put there now, just park $50 and let it sit.
In your new country, the school is in the best position to advise you which bank to use. Listen to them. You'll need a local checking or current account, plus maybe a local credit card if you can get one.
Also consider opening a Vanguard investment account and IRA. This gets close to impossible once you've left the US. even if you don't have money to put there now, just park $50 and let it sit.
In your new country, the school is in the best position to advise you which bank to use. Listen to them. You'll need a local checking or current account, plus maybe a local credit card if you can get one.
Re: Banking
Thanks for the advice Sid. I guess a better question is what large American bank have people used. I bank at the local small town bank and I think a bigger bank would be more useful
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shadowjack
- Posts: 2140
- Joined: Sat Oct 06, 2012 9:49 am
Re: Banking
Citi has a fairly large network of partner banks around the world.
Re: Banking
Small town banks can be ok. Just make sure you have Internet access. And compare the fee for transferring money in to your account from abroad.
If something goes wrong, with a small bank you can always call Phyllis who remembers you and she'll look into it. As opposed to the big banks, where you'll be on hold with a call center for approx a week, and eventually disconnected.
If something goes wrong, with a small bank you can always call Phyllis who remembers you and she'll look into it. As opposed to the big banks, where you'll be on hold with a call center for approx a week, and eventually disconnected.
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wntriscoming
- Posts: 114
- Joined: Mon Oct 01, 2012 3:44 am
Re: Banking
Agreed with Sid. We had a small problem with our account at our credit union and the bank just called my mom, who also banks there, to take care of it. If you like your bank, no reason to change.
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twoteachers
- Posts: 120
- Joined: Tue Dec 23, 2014 9:15 pm
Re: Banking
Definitely make sure you have a bank you can access over the Internet . It would also help to have a credit card from the same bank. You can keep track of everything together. I personally use Chase. I also opened a British Airways card through them. It's US based, and they don't charge me currency transaction fees if I use the card anywhere. I also collect avios which are useful for getting flight upgrades on those long flights back.
Re: Banking
You probably won't have a choice of which in-country bank to use, generally the bank your school uses is the bank that you will use. In China we are lucky to have access to UnionPay which is accepted all over SE Asia, but for those purchases that aren't possible with UnionPay we bank with our small town credit union and use their VISA. The fact we can transfer money easily and write electronic cheques on our account is great. I would also suggest giving someone at home signing rights to your account. If anything unexpected comes up then they have much easier access and the bank will answer their questions.
Response
First there are no real international banks that have transparent banking with the USA. There isnt a Bank you can open an account in the USA that would have a Branch in a foreign city that you could walk into, deposit currency and then use Bill pay or a debit card. Lots of people have tried and they either end up costing more in time and or money then just sending a wire to begin with.
BOA use to have some international branches, CITI and HSBC tend to have one branch or office in major cities worldwide, the issue is if you will be able to access your western accounts or if it would be cheaper to use different banking resources. HSBC claims you can do it, but again its just an internal wire (with reduced costs) but you have to have all kinds of premium accounts and fees that would cost the same as a regular wire would, plus HSBC isnt as common in the States. Chase has a similar set up but you have to have a brokerage account and commercial checking account. You can sometimes deposit cash overseas into a brokerage account, in escrow and then request a dispersion of funds and have those funds credited to your checking account, but its a convoluted process.
First what are your banking "needs"? (Do you have regular bills back home you have to pay?).
There really are no "free" ATMs, most US banks charge about 3% for foreign currency transactions at the ATM. Some don't, most do, some banks will also charge you a non-network ATM fee as well.
Its unlikely your school will auto deposit into your home bank, I only know of a handful of schools that do it. What typically happens is the school sets you up with a banking account, called a passbook account. This is a savings account that essentially earns little interest and you have an account register that you record your transactions on. You can often use either the ATM card or the passbook at a bank ATM. If you dont have your passbook with you, when you use it ata bank with a teller or at a bank ATMit will update itself with all your transactions. When you get to the last page you get a new passbook. Be very protective of your passbook. This is like a savings account back in the USA. You get at ATM card that you can use at ATM machines or at major retailers. You may also be able to use the card at various POS terminals to make purchases much like a debit card. You will also find debit cards and credit cards gaining in popularity and different regions varry. Some are based more on electronic transactions like debit cards and some are still largely cash based cultures. "Checking" accounts dont really exist outside of Europe for personal use. You may be offered a credit card at some point. Sometimes right away, sometimes in 6 months. Sometimes much later.
Basically there are three ways to send money back to the states:
1) Wire Transfer
2) Transfer Services
3) Mail
A wire transfer is a bank to bank transfer of funds. Their are two types tele-fax and electronic. With a telefax wire The initiating bank (in china) calls the wire/international banking office for your bank in the USA with your banking info, and then follows up with a fax of the transaction. Basically its a contract between the banks to move the money from one bak to another. Its the oldest type of wire transfer there is and can be really slow (5 days to a month), depending on the relationship and reputation of the bank, you may get the money credited to your account before it "settles". An electronic transfer uses (in the USA) the ACH (Automated Clearing House, which is the retail component of CHIPS and FEDWIRE. FEDWIRE services government securities and the Federal reserve. CHIPS services commercial corporations and non government commercial paper. They dont really matter as locally its the ACH your bank deals with. The ACH is the same entity that handles your checks. So when you write a check it gets turned into an electronic transaction, its the ACH that handles that) and a similar processor in the foreign country.
So in an electronic wire the banks talk to their clearinghouses and the clearing houses talk to each other. The important thing for you to know in an electronic wire is where and when is the "settlement" day/time. The settlement day time determines the exchange rate, and the where determines whos exchange. That is going to determine how much money goes into your account.
Wire transfers have the benefit of reliability, security and accessibility (because the money ends up in your account which is a place you can then do something with it). The draw back though is cost (they are typically the most expensive) since you get charged by the sending bank and receiving bank. A wire transfer can cost between $20 and $50 when all the fees are paid. They also arent convenient. Since you have to go to the bank during business hours, and will also need to go during the time the foreign account representative is there. Since you will want someone who 1) speaks english 2) Knows how and can access the wire services for that bank branch. It might shock you that you can only do that at certain times of the day or week.
2) Transfer Services you know these already. Western Union, Money Gram, and PayPal. Instead of using banks directly these companies have their own network of offices and agents across the globe. You can walk into a 7-11 (yes lots of these are in china) in Beijing that acts as an agent for Western union and "send" the money to a grocery store in Florida whos a western union agent. Costs are usually cheaper ranging as low as $7 to about $25, with the average around $15. The benefits are that its FAST, usually within 10 minutes to an hour the money is available. Its also cheaper per transaction. The disadvantages are that 1) Someone like a family member or trusted friend has to pick up the money (meaning going there, waiting in line, and then taking it to your bank and depositing it in your account). 2) The daily/transaction limits are small, usually between $300 and $1000 per transfer. Meaning if you have to have 2,500 every month to pay your mortgage and student loans. That means someone has to make 3 trips on 3 different days to pick up the money an deposit it in your account.
3) Bank by mail. Many banks in the USA including smaller state banks, credit unions and online banks offer this method though no one uses it very often. Basically, you go to your bank (or post office) and get an official check (or bank draft) put it in an envelope and mail it to your banks "Bank by Mail Address". The bank gets the check and then you wait for the check to clear, and the money is credited to your account. The benefits are that its cheap, and doesnt require someone in the states to act as your liaison. This can be the cheapest way as a bank draft cost about $1 and international postage is about $.50. The problems are that its VERY slow. First class international mail can take a month or longer to arrive. You can send it EMS or DHL if you want it to get there faster but its much more expensive (between $15-$30) and its also far less secure. Mail with money in it tends to get lost, and getting the money refunded from the chinese bank can take a long time. You also have to wait for the check to clear, which can take 10-30 days. (In all fairness I have to say Ive known people to do the bank by mail approach using cash (USD), though I wouldnt recommend it).
So basically it depends what your needs are. My advice is:
I recommend a large multinational bank, in the US these would include Chase, BoA, Wells Fargo, as opposed to a state or local bank/credit union. The bennefits are:
1) An English speaking customer service number and preferably an international banking department. English PC/Online banking is a nice plus. You dont want to be up at 2am to call during business hours back home and deal with a bunch of international calls. Getting a debit card replaced might involve having a friend or family member mailing it to you overseas. The multinational banks usually have procedures in place for the majority of conceivable issues and problems.
2) An IBAN (International Bank Account Number) which may be different then the ABA (American Banking Association) account number, (which you see more off with smaller state banks and credit unions then the large national banks). This means that when doing a wire transfer the small/local bank has to use a large intermediary bank that has an ISBN. This intermediary bank then uses FEDWIRE to transfer your funds using the ABA number, its an extra layer requiring extra cost.
3) A SWIFT code. Which is used by the various clearing houses to identify various banks. This is in addition to your banks "routing number" used in the Federal Reserve American Banking System and an ISBN. SWIFT makes bank transfers process faster.
4) A compatible PIN number. ATM machines use either use 4 or 6 digit pins. Foreign machines will accept 4 digit pins. Some will accept two zeros and then your 4 digit PIN. Some wont accept PINS that start with 0. You also want an ATM debit card that uses as many processors as possible, most ATMs accept Plus, Cirrus & Masestro, which are common to all the big USA banks. This means that your foreign (western ATM card) may be usable at a smaller number of ATM machines often located at bank branches.
5) You will want a western bank that offers a variety and depth of functions with online banking. In general small/local banks have less sophisticated systems. Multinational let you do all kinds of account and customer service options.
6) A multinational is more likely to have a banking app for your phone, making accessing your account easier and more convenient. Sometimes you can make a quick overseas deposit using a cashiers check/bank draft and using the remote photo deposit tools.
7) Multinational banks are more likely to have broader available overseas access. A local bank may not allow you to do anything overseas other than make a debit charge using visa/mastercard and make an ATM withdrawal depending on the region. Its important to discuss your destination with your banking institution and what services are available. In most cases it comes down to speed and cost of wires and functionality of online banking.
8) A multinational is going to often have more investment options, that will not require you to return Stateside to set up an investment account, since you already have a banking relationship with them.
9) Exchange Rates: remember when i was discussing the settlement date? You basically want to find out how soon and where the banks settle their wires. The sooner the settlement date to the transaction date the better, as the exchange rate is less likely to vary as much. Chase settles in Germany, BOA in New York. Of course you should also shop around for the lowest account fees and transfer/transaction fees.
Most ITs do a lot of their banking by ATM. As a foreigner the only time your likely to go into the bank to see a teller is to 1) convert currency, 2) cash travelers checks, and 3) Wire money. Foreign bank online banking and ATMs is going to have varied levels of English support. Online banking has the option of using translation engines to access more complex functions. You dont have this ability on a foreign ATM. You may only be able to make withdraws, deposits, and update your passbook. In the host language you may be able to do many other functions such as pay bills, send currency, make payments to credit cards, and complete various applications for credit and loans.
While you will likely need to use the account and bank your IS sets up for you, often once you have a residence card (not just a visa) you can open additional accounts at other financial institutions that might have better options or faster routes to account services such as credit cards or home loans at some point.
Theres a lot of variability in banks that ISs choose. Some go with really large national banks that have an almost overwhelming presence in the region and some go with very small regional local banks. The two primary issues you want are:
1) Accessibility: (A) How common are ATMs? (B) What are the business hours for the counter/foreign business desk?
2) Language/English Availability: (A) How much can you do by ATM/Online Banking in English? (B) When and how often is an English speaking manager/teller/officer available?
Many banks have limited hours that an English speaking representative is available to conduct transactions/wires, sometimes only for a few hours a day or even week.
Speaking of credit cards, this is often the most asked long term banking issue. Using foreign cards can be very expensive with transaction and conversion fees as well as accessibility. Its much more cost effective to get a local credit card, but banks are very hesitant as in most cases you can leave the country very easily and not pay the debt. There are different systems, in some locations your IS may have a relationship with the bank and you can get a credit card with almost immediately with a sizable credit limit. In other location you may have to wait months or years and complete a complex application process for a modest credit limit. My suggestions are:
1) Before you leave have your bank that you have had the longest relationship with write you a letter of introduction on bank letterhead singed by a bank officer.
2) Save all your salary statements. Banks overseas care less about credit ratings and more about income.
3) Speak to your leadership and business office,a s multiple people from the bank you apply to will contact the IS to verify your employment, title and income.
4) Follow the application instructions.
5) Understand that requirements and approvals are largely on a case by case basis, and credit decisions are essentially up to the bank to approve or decline. This means you may be rejected and a local making 1/10th your income is approved. A lot of the process has as much to do with relationships than rules.
Unless you have fees associated with maintaining your current western bank accounts there is little reason to close them. I dont disagree with the idea of starting an investment relationship before you leave, however its not essential. You can invest in other countries such as HK or the UK with less restrictions then in the US. Its not something thats imperative you do right away.
There are additional banking or financial options than traditional banks.
Post Office: In a lot of regions especially Asian and rural areas you may have the option of opening a "Post Office" account. This is very similar to a bank account accept you go to the post office to do your transactions and ATMs.
Convenience Stores: Another option almost unheard of in the States is 7-11, you can open an account with them you get a passbook and ATM card and you can apply for a debit and credit card. There are various discounts and point reward programs, but in a lot of countries you can do a LOT at 7-11. Some of them are impromptu bars and cafes. You can buy a variety of meals, send letters, pay bills, send coin, pick up packages, buy/recharge mobile phones, make phone calls, send faxes, make photo copies, print documents, buy flight tickets, bus, train tickets. They are also create resources of information and other services from a pharmacy/clinic to a tailor laundromat.
Cash Card Services: These are often linked as part of a public transportation system. You get a plastic card with an NIC/NFC chip inside it that allows you to pass the card over a sensor and move quickly through checkpoints on the local/regional metro transportation system. You can often use these cards at various stations and the stores, restaurants and convenience stores as well as vending machines. You add coin at a machine near the transportation station or in a convenience store. The other option is your ISs business office may be able to add coin to the prepaid card as well. Its much faster and easier than a debit or credit card or using cash.
IS: You may be able to do various financial transactions and business though your ISs business office.
Online Financial Providers: Institutions like Ally bank that will refund ANY ATM fee and you largely bank by mail. You get better interest, good online and ATM banking support. You can also look at services like PayPal, and other virtual wallet systems that might give you saving if you do a lot of small wires or their equivalents. You can find various pseudo banking options that come with visa/MC/AE and you make remote deposits typically by mail but they have relationships with remittance services so you can use western union to deposit coin, and they generally have more relaxed restrictions when dealing with OFAC regions.
In general get your salary dismemberment in the local currency (exception is if the regions currency is very unstable). The reason being:
1) You are going to do have most of your expenses in the local currency.
2) Every time you (or someone on your behalf such as your IS) changes currency there is cost associated with it. You may not pay a "fee" but there will be variations in buy and sell rates that may not be ideal for you at he institution your IS banks at or at the time they make the exchange.
3) The more control you exercise over your salary the better position you are in to identify and take advantage of favorable currency exchange advantages that may happen at differing times or may have advantages at specific institutions.
In general you have 5 currency exchange rates:
1) LIBOR: The "London Interbank Offer Rate", "Spot Rate", or "Wholesale Rate" this is the currency exchange rate (actually its a loan interest rate, but currency exchange is basically a loan that settles very fast) that banks offer each other on very large currency exchanges. This is the rate you find listed on major exchanges and on various news services. This is the closest to a pure/true valuation of a currency to its purchasing power. Its what most people think when they envision what a currency is worth. Its very difficult to take advantage of this rate. Your bank MAY offer you a LIBOR currency rate but with the foreign transaction fee or accessibility fees you dont get anywhere near the LIBOR rate.
2) Commercial: This is the exchange rate often associated with various business transactions that include wire transfers and ATM transactions. This is usually the best bank exchange rate you can find posted but its difficult to take advantage of. This is the business rate your IS is likely to get on payroll transactions and likely the only time you use it. In general it is the LIBOR rate +-1%.
3) Credit: This is a retail rate that you will have the most exposure to when using a credit card (and some debit card transactions). Some banks use the Credit rate when settling wire transfers, which is more common when using an intermediary bank (such as the case in a local/state bank credit union) and is in addition to the transfer fee. In general it is the LIBOR rate +-2--2.5% Some ATM transactions are settled using the credit rate.
4) Cash: This is a retail rate that you will have the most experience with as its what you find when you are exchanging cashiers checks and coin at approved exchanges such as banks. You also find this rate at many ATMs. This is generally the LIBOR rate +- 3--4%.
5) Convenience: Commonly called "Dynamic Currency Conversion", "Cardholder Preferred Currency". This is a currency conversion done when requesting, using the option or done as an uninformed convenience (forced) when making a purchase by card or coin in your choice of currency. In these cases you know exactly how much the transaction will post and appear on your statement or how much in a currency you will pay, it is often done at very unfavorable rates. The merchant or the processor is giving you a currency rate that includes one of the transaction rates above, plus a fee, and a markup for the convenience.
The most common time you see convenience rates for currency is in hotels and restaurants that will accept foreign currency as an alternative to local currency. In general these rates can be as high as +-10% though 7% is more common.
The largest variable is in the use of ATMs as its not always clear what the exchange rate will be, in addition to transaction fees.
Some ITs that are unfamiliar with international travel may want to know how to take currency with them.
1) You can often buy currency from a multinational bank before you leave. Be sure to check the exchange rate and fees. Some banks give horrible exchange rates for "counter" currency exchange, though this often includes 1 or 2 day delivery to home or pick up at the bank. You can get a wide variety of currencies and hard currencies (Euro, etc.) may be available immediately.
2) Carry "hard" currency: Hard currencies are stable international currencies usually (US Dollars, Euros, Pounds Sterling, Japanese Yen). You can just take cash with you and exchange it anywhere. While this is one of the least safe it is the most convenient. You can change a little or a lot as you travel exchanging it at international airports or other "Bureau Exchange" as you travel. This method might be the best if traveling somewhere remote that has minimal ATM access and cards are not readily accepted. The terms buy and sell are from the perspective of the provider doing the exchange. This is the sell rate when the provider takes your local currency (USD/GBP/Euro)and "sells you" a foreign currency. When you return from overseas back home they are "buying" your foreign currency thus you use the buy rate. Another option you may be quoted is whats called a cross rate which occurs in the exchange of currencies that do not include the local currency (such as being in Canada and exchanging US Dollars for Euros).
3) Cards: Either Debit/ATM or credit cards you can either process a transaction at the counter or through an ATM. This method is generally safe and convenient, of course it can also be more expensive depending on the card, bank and ATM used. Due to transaction fees its much cheaper to make one large transaction at an ATM to withdraw cash then to use the card at individual merchants as each transaction regardless of amount will incur a transaction fee. One looking for an ATM the preference is:
(A) A government owned/operated AT: Such as a post office ATM.
(B) A National Bank: Often you will find one group of machines used for local cards and a separate group of ATMs used for foreign overseas cards. These often provide multi language support, though you are often limited to currency withdraws only. Understand that you may not be able to read the local language of any warning on the machine. These areas are generally more secure and safer.
(C) Regional Bank: You may not be able to use these with anything but a local regional ATM card.
(D) Airport/Hotel: These can be independently owned ATMs or bank ATMs they may have higher fees but are generally safe to use.
(E) Convenience Store: If the machine is well lit and in a recongnised area its very likely safe and probably used by the locals. Rates and fees can be a mixed, and language options may be limited.
(F) Other: These include ATMs in remote or isolated locations. They may not even be an ATM but a machine designed to skim your account information/PIN and then report they are out of order or other error. These machines be be monitored by criminals or thieves and potentially rob you or follow you home.
4) You can still get travelers cheques and if you belong to a credit union or at some banks they have no fee. These are generally very safe and can be replaced quickly. Few people use them anymore but in rural areas or regions with safety concerns these may be preferred as there is almost always some bank that will change them. Travex and Visa have relodable plastic card that allows you to have many of the same safety benefits with the convenience of using an ATM. I carry a few travelers cheques for emergencies. but generally dont use them any more.
5) Overseas Account: Depending on your Bank (mostly CITI and HSBC) you have the potential of opening a foreign account and receiving an ATM/Debit card before you depart and transfer currency before you even leave. When you arrive you can use a local ATM.
A few final parting suggestions:
1) Very few banks will accept actual minted coins for currency exchange so change them locally before you return home.
2) Be aware that you must declare any amount over USD$10K or its equivalent in foreign currency, or negotiable instruments (such as prepaid cards, checks, drafts or bonds). Also research what the import/export limits of foreign currency is. Some regions do not allow their currency to leave the country in any amount, or only very small amounts.
3) Learn how to identify authentic currency, either look for the watermarks against the light or the raised rough areas on a currency note. Colors and foils are some of the easiest to replicate. IF you do get stuck with some counterfeit currency you may try saving it until you return home and exchange it at an airport exchange. They usually do not know how to identify many of the less common currencies.
4) Be very protective of your bank passbook. In some regions you do NOT need a PIN to access your account with the passbook, and while it may sound horrible a teller may not be able to differentiate you from your residence card. In general keep your bank passbook in a safe place and do not carry it around with you needlessly.
5) Early in your arrival, there is a surreal use of foreign currency that almost feels like your not using real money. While it will take some time try to start thinking of costs and prices in the local currency. The sooner you live competently on the local economy the sooner you can budget intelligently. In JP for example coins have real value. JPY100¥ coins look, feel, and kind of spend like quarters but those are USD$1 the smallest paper note is JPY1000¥ but those are essentially USD$10 notes. You will be surprised how quickly and fast you can go though JPY10,000¥ notes like they are USD$20 notes.
6) You will invariably have a large number of coins, banks will take them and some ATMs will accept coins. My preferred method is to deposit them on my metro cash card though the IS business office.
7) Budget your daily expenses in cash. In many regions the ability to use a credit/debit card can be very limited.
8) Be wary of Scams, research how to identify tourist police if the region has such a thing.
Common Scams:
1) Touts: Cute college girls handing out fliers for various bars, arcades, etc. Often the scam is getting you in the door to order a few super overpriced drinks or cover/table charges. You get a menu with reasonable prices and think youll have a drink and leave. Then get the bill and find out there is a very high minimum/door/cover/table charge. Sometimes youll find a very attractive girl or woman who will sit next to you and starta conversation. Seems totally innocent until you realize that shes a hostess of some kind and a few minutes of conversation has a huge cost.
2) Taxis: Either insist on the meter or negotiate the price for your ride before getting in. Sometimes you find drivers who have figured out how to manipulate their meter or use their mobile and insist after the ride that they are off duty and are anew Uber or Lyft driver that just came to the area.
3) Beggars: I am not talking about the poor with a bowl or plate on the sidewalk that dont hassle you. The current scam is to dress up as monks in Buddhist robes who will offer you a sticker or some trinket with a blessing and then show you a book of recent donations for the blessing. The expectation is that you must match or beat the last or most recent donation, and that the sticker or trinket is a blessing that can not be taken back once accepted.
4) Technology: These are sophisticated but can include anything from a free wifi skimming scam with mis direction, to SMS alerts to various card skimming devices. A big one now is the dating SMS or app. The scammer uses a dating app to manipulate the matching algorithm, or you get a random SMS (text) with pics from some local and after convincing you they know you and you know them they arrange a meeting which turns into a tout scam or some kind of robbery. A variation of it for woman is you get an unknown text and very suggestive photo from some college girl suggesting your husband is having an affair with her, and she is just as hurt and betrayed as you are and you agree to meet some where out of the way or an apartment where once your inside its all a set up and your robbed.
5) Fake Police: Your sold something and then shortly after your confronted by what looks like a police officer (often a guy) and a "foreign police officer" (often a woman) the scam works because foreign police in many regions do not wear uniforms. She explains that youve just bought a stolen mobile card, or lottery ticket that is illegal for foreigners, or its illegal to drink in public or some minor crime, that if you pay a fine immediately then you wont need to be arrested, etc. If this happens just say one minute and speed dial the local police number, scammers will walk away.
6) Door Sales: Often a pizza scam, but Amazon is getting more common. A courier or delivery person has a package or pizza, which you didnt order or arent expecting. The delivery person apologizes and offers to sell you the pizza at a discount. You take the deal only to find out you bought an empty pizza box or other packaging that has maybe a rock in it.
7) Currency Swap: This is an old one, often used in seedier transactions or in night spots. There are two versions/ The first you give the person (bartender, etc. a note) they look at it and examine it and say no good not real, counterfeit and you take it back and give them another one. They palmed the first bill which was real and gave you back a fake note. The other version is you give them a genuine note for payment and then give your change in counterfeit or fake notes.
BOA use to have some international branches, CITI and HSBC tend to have one branch or office in major cities worldwide, the issue is if you will be able to access your western accounts or if it would be cheaper to use different banking resources. HSBC claims you can do it, but again its just an internal wire (with reduced costs) but you have to have all kinds of premium accounts and fees that would cost the same as a regular wire would, plus HSBC isnt as common in the States. Chase has a similar set up but you have to have a brokerage account and commercial checking account. You can sometimes deposit cash overseas into a brokerage account, in escrow and then request a dispersion of funds and have those funds credited to your checking account, but its a convoluted process.
First what are your banking "needs"? (Do you have regular bills back home you have to pay?).
There really are no "free" ATMs, most US banks charge about 3% for foreign currency transactions at the ATM. Some don't, most do, some banks will also charge you a non-network ATM fee as well.
Its unlikely your school will auto deposit into your home bank, I only know of a handful of schools that do it. What typically happens is the school sets you up with a banking account, called a passbook account. This is a savings account that essentially earns little interest and you have an account register that you record your transactions on. You can often use either the ATM card or the passbook at a bank ATM. If you dont have your passbook with you, when you use it ata bank with a teller or at a bank ATMit will update itself with all your transactions. When you get to the last page you get a new passbook. Be very protective of your passbook. This is like a savings account back in the USA. You get at ATM card that you can use at ATM machines or at major retailers. You may also be able to use the card at various POS terminals to make purchases much like a debit card. You will also find debit cards and credit cards gaining in popularity and different regions varry. Some are based more on electronic transactions like debit cards and some are still largely cash based cultures. "Checking" accounts dont really exist outside of Europe for personal use. You may be offered a credit card at some point. Sometimes right away, sometimes in 6 months. Sometimes much later.
Basically there are three ways to send money back to the states:
1) Wire Transfer
2) Transfer Services
3) Mail
A wire transfer is a bank to bank transfer of funds. Their are two types tele-fax and electronic. With a telefax wire The initiating bank (in china) calls the wire/international banking office for your bank in the USA with your banking info, and then follows up with a fax of the transaction. Basically its a contract between the banks to move the money from one bak to another. Its the oldest type of wire transfer there is and can be really slow (5 days to a month), depending on the relationship and reputation of the bank, you may get the money credited to your account before it "settles". An electronic transfer uses (in the USA) the ACH (Automated Clearing House, which is the retail component of CHIPS and FEDWIRE. FEDWIRE services government securities and the Federal reserve. CHIPS services commercial corporations and non government commercial paper. They dont really matter as locally its the ACH your bank deals with. The ACH is the same entity that handles your checks. So when you write a check it gets turned into an electronic transaction, its the ACH that handles that) and a similar processor in the foreign country.
So in an electronic wire the banks talk to their clearinghouses and the clearing houses talk to each other. The important thing for you to know in an electronic wire is where and when is the "settlement" day/time. The settlement day time determines the exchange rate, and the where determines whos exchange. That is going to determine how much money goes into your account.
Wire transfers have the benefit of reliability, security and accessibility (because the money ends up in your account which is a place you can then do something with it). The draw back though is cost (they are typically the most expensive) since you get charged by the sending bank and receiving bank. A wire transfer can cost between $20 and $50 when all the fees are paid. They also arent convenient. Since you have to go to the bank during business hours, and will also need to go during the time the foreign account representative is there. Since you will want someone who 1) speaks english 2) Knows how and can access the wire services for that bank branch. It might shock you that you can only do that at certain times of the day or week.
2) Transfer Services you know these already. Western Union, Money Gram, and PayPal. Instead of using banks directly these companies have their own network of offices and agents across the globe. You can walk into a 7-11 (yes lots of these are in china) in Beijing that acts as an agent for Western union and "send" the money to a grocery store in Florida whos a western union agent. Costs are usually cheaper ranging as low as $7 to about $25, with the average around $15. The benefits are that its FAST, usually within 10 minutes to an hour the money is available. Its also cheaper per transaction. The disadvantages are that 1) Someone like a family member or trusted friend has to pick up the money (meaning going there, waiting in line, and then taking it to your bank and depositing it in your account). 2) The daily/transaction limits are small, usually between $300 and $1000 per transfer. Meaning if you have to have 2,500 every month to pay your mortgage and student loans. That means someone has to make 3 trips on 3 different days to pick up the money an deposit it in your account.
3) Bank by mail. Many banks in the USA including smaller state banks, credit unions and online banks offer this method though no one uses it very often. Basically, you go to your bank (or post office) and get an official check (or bank draft) put it in an envelope and mail it to your banks "Bank by Mail Address". The bank gets the check and then you wait for the check to clear, and the money is credited to your account. The benefits are that its cheap, and doesnt require someone in the states to act as your liaison. This can be the cheapest way as a bank draft cost about $1 and international postage is about $.50. The problems are that its VERY slow. First class international mail can take a month or longer to arrive. You can send it EMS or DHL if you want it to get there faster but its much more expensive (between $15-$30) and its also far less secure. Mail with money in it tends to get lost, and getting the money refunded from the chinese bank can take a long time. You also have to wait for the check to clear, which can take 10-30 days. (In all fairness I have to say Ive known people to do the bank by mail approach using cash (USD), though I wouldnt recommend it).
So basically it depends what your needs are. My advice is:
I recommend a large multinational bank, in the US these would include Chase, BoA, Wells Fargo, as opposed to a state or local bank/credit union. The bennefits are:
1) An English speaking customer service number and preferably an international banking department. English PC/Online banking is a nice plus. You dont want to be up at 2am to call during business hours back home and deal with a bunch of international calls. Getting a debit card replaced might involve having a friend or family member mailing it to you overseas. The multinational banks usually have procedures in place for the majority of conceivable issues and problems.
2) An IBAN (International Bank Account Number) which may be different then the ABA (American Banking Association) account number, (which you see more off with smaller state banks and credit unions then the large national banks). This means that when doing a wire transfer the small/local bank has to use a large intermediary bank that has an ISBN. This intermediary bank then uses FEDWIRE to transfer your funds using the ABA number, its an extra layer requiring extra cost.
3) A SWIFT code. Which is used by the various clearing houses to identify various banks. This is in addition to your banks "routing number" used in the Federal Reserve American Banking System and an ISBN. SWIFT makes bank transfers process faster.
4) A compatible PIN number. ATM machines use either use 4 or 6 digit pins. Foreign machines will accept 4 digit pins. Some will accept two zeros and then your 4 digit PIN. Some wont accept PINS that start with 0. You also want an ATM debit card that uses as many processors as possible, most ATMs accept Plus, Cirrus & Masestro, which are common to all the big USA banks. This means that your foreign (western ATM card) may be usable at a smaller number of ATM machines often located at bank branches.
5) You will want a western bank that offers a variety and depth of functions with online banking. In general small/local banks have less sophisticated systems. Multinational let you do all kinds of account and customer service options.
6) A multinational is more likely to have a banking app for your phone, making accessing your account easier and more convenient. Sometimes you can make a quick overseas deposit using a cashiers check/bank draft and using the remote photo deposit tools.
7) Multinational banks are more likely to have broader available overseas access. A local bank may not allow you to do anything overseas other than make a debit charge using visa/mastercard and make an ATM withdrawal depending on the region. Its important to discuss your destination with your banking institution and what services are available. In most cases it comes down to speed and cost of wires and functionality of online banking.
8) A multinational is going to often have more investment options, that will not require you to return Stateside to set up an investment account, since you already have a banking relationship with them.
9) Exchange Rates: remember when i was discussing the settlement date? You basically want to find out how soon and where the banks settle their wires. The sooner the settlement date to the transaction date the better, as the exchange rate is less likely to vary as much. Chase settles in Germany, BOA in New York. Of course you should also shop around for the lowest account fees and transfer/transaction fees.
Most ITs do a lot of their banking by ATM. As a foreigner the only time your likely to go into the bank to see a teller is to 1) convert currency, 2) cash travelers checks, and 3) Wire money. Foreign bank online banking and ATMs is going to have varied levels of English support. Online banking has the option of using translation engines to access more complex functions. You dont have this ability on a foreign ATM. You may only be able to make withdraws, deposits, and update your passbook. In the host language you may be able to do many other functions such as pay bills, send currency, make payments to credit cards, and complete various applications for credit and loans.
While you will likely need to use the account and bank your IS sets up for you, often once you have a residence card (not just a visa) you can open additional accounts at other financial institutions that might have better options or faster routes to account services such as credit cards or home loans at some point.
Theres a lot of variability in banks that ISs choose. Some go with really large national banks that have an almost overwhelming presence in the region and some go with very small regional local banks. The two primary issues you want are:
1) Accessibility: (A) How common are ATMs? (B) What are the business hours for the counter/foreign business desk?
2) Language/English Availability: (A) How much can you do by ATM/Online Banking in English? (B) When and how often is an English speaking manager/teller/officer available?
Many banks have limited hours that an English speaking representative is available to conduct transactions/wires, sometimes only for a few hours a day or even week.
Speaking of credit cards, this is often the most asked long term banking issue. Using foreign cards can be very expensive with transaction and conversion fees as well as accessibility. Its much more cost effective to get a local credit card, but banks are very hesitant as in most cases you can leave the country very easily and not pay the debt. There are different systems, in some locations your IS may have a relationship with the bank and you can get a credit card with almost immediately with a sizable credit limit. In other location you may have to wait months or years and complete a complex application process for a modest credit limit. My suggestions are:
1) Before you leave have your bank that you have had the longest relationship with write you a letter of introduction on bank letterhead singed by a bank officer.
2) Save all your salary statements. Banks overseas care less about credit ratings and more about income.
3) Speak to your leadership and business office,a s multiple people from the bank you apply to will contact the IS to verify your employment, title and income.
4) Follow the application instructions.
5) Understand that requirements and approvals are largely on a case by case basis, and credit decisions are essentially up to the bank to approve or decline. This means you may be rejected and a local making 1/10th your income is approved. A lot of the process has as much to do with relationships than rules.
Unless you have fees associated with maintaining your current western bank accounts there is little reason to close them. I dont disagree with the idea of starting an investment relationship before you leave, however its not essential. You can invest in other countries such as HK or the UK with less restrictions then in the US. Its not something thats imperative you do right away.
There are additional banking or financial options than traditional banks.
Post Office: In a lot of regions especially Asian and rural areas you may have the option of opening a "Post Office" account. This is very similar to a bank account accept you go to the post office to do your transactions and ATMs.
Convenience Stores: Another option almost unheard of in the States is 7-11, you can open an account with them you get a passbook and ATM card and you can apply for a debit and credit card. There are various discounts and point reward programs, but in a lot of countries you can do a LOT at 7-11. Some of them are impromptu bars and cafes. You can buy a variety of meals, send letters, pay bills, send coin, pick up packages, buy/recharge mobile phones, make phone calls, send faxes, make photo copies, print documents, buy flight tickets, bus, train tickets. They are also create resources of information and other services from a pharmacy/clinic to a tailor laundromat.
Cash Card Services: These are often linked as part of a public transportation system. You get a plastic card with an NIC/NFC chip inside it that allows you to pass the card over a sensor and move quickly through checkpoints on the local/regional metro transportation system. You can often use these cards at various stations and the stores, restaurants and convenience stores as well as vending machines. You add coin at a machine near the transportation station or in a convenience store. The other option is your ISs business office may be able to add coin to the prepaid card as well. Its much faster and easier than a debit or credit card or using cash.
IS: You may be able to do various financial transactions and business though your ISs business office.
Online Financial Providers: Institutions like Ally bank that will refund ANY ATM fee and you largely bank by mail. You get better interest, good online and ATM banking support. You can also look at services like PayPal, and other virtual wallet systems that might give you saving if you do a lot of small wires or their equivalents. You can find various pseudo banking options that come with visa/MC/AE and you make remote deposits typically by mail but they have relationships with remittance services so you can use western union to deposit coin, and they generally have more relaxed restrictions when dealing with OFAC regions.
In general get your salary dismemberment in the local currency (exception is if the regions currency is very unstable). The reason being:
1) You are going to do have most of your expenses in the local currency.
2) Every time you (or someone on your behalf such as your IS) changes currency there is cost associated with it. You may not pay a "fee" but there will be variations in buy and sell rates that may not be ideal for you at he institution your IS banks at or at the time they make the exchange.
3) The more control you exercise over your salary the better position you are in to identify and take advantage of favorable currency exchange advantages that may happen at differing times or may have advantages at specific institutions.
In general you have 5 currency exchange rates:
1) LIBOR: The "London Interbank Offer Rate", "Spot Rate", or "Wholesale Rate" this is the currency exchange rate (actually its a loan interest rate, but currency exchange is basically a loan that settles very fast) that banks offer each other on very large currency exchanges. This is the rate you find listed on major exchanges and on various news services. This is the closest to a pure/true valuation of a currency to its purchasing power. Its what most people think when they envision what a currency is worth. Its very difficult to take advantage of this rate. Your bank MAY offer you a LIBOR currency rate but with the foreign transaction fee or accessibility fees you dont get anywhere near the LIBOR rate.
2) Commercial: This is the exchange rate often associated with various business transactions that include wire transfers and ATM transactions. This is usually the best bank exchange rate you can find posted but its difficult to take advantage of. This is the business rate your IS is likely to get on payroll transactions and likely the only time you use it. In general it is the LIBOR rate +-1%.
3) Credit: This is a retail rate that you will have the most exposure to when using a credit card (and some debit card transactions). Some banks use the Credit rate when settling wire transfers, which is more common when using an intermediary bank (such as the case in a local/state bank credit union) and is in addition to the transfer fee. In general it is the LIBOR rate +-2--2.5% Some ATM transactions are settled using the credit rate.
4) Cash: This is a retail rate that you will have the most experience with as its what you find when you are exchanging cashiers checks and coin at approved exchanges such as banks. You also find this rate at many ATMs. This is generally the LIBOR rate +- 3--4%.
5) Convenience: Commonly called "Dynamic Currency Conversion", "Cardholder Preferred Currency". This is a currency conversion done when requesting, using the option or done as an uninformed convenience (forced) when making a purchase by card or coin in your choice of currency. In these cases you know exactly how much the transaction will post and appear on your statement or how much in a currency you will pay, it is often done at very unfavorable rates. The merchant or the processor is giving you a currency rate that includes one of the transaction rates above, plus a fee, and a markup for the convenience.
The most common time you see convenience rates for currency is in hotels and restaurants that will accept foreign currency as an alternative to local currency. In general these rates can be as high as +-10% though 7% is more common.
The largest variable is in the use of ATMs as its not always clear what the exchange rate will be, in addition to transaction fees.
Some ITs that are unfamiliar with international travel may want to know how to take currency with them.
1) You can often buy currency from a multinational bank before you leave. Be sure to check the exchange rate and fees. Some banks give horrible exchange rates for "counter" currency exchange, though this often includes 1 or 2 day delivery to home or pick up at the bank. You can get a wide variety of currencies and hard currencies (Euro, etc.) may be available immediately.
2) Carry "hard" currency: Hard currencies are stable international currencies usually (US Dollars, Euros, Pounds Sterling, Japanese Yen). You can just take cash with you and exchange it anywhere. While this is one of the least safe it is the most convenient. You can change a little or a lot as you travel exchanging it at international airports or other "Bureau Exchange" as you travel. This method might be the best if traveling somewhere remote that has minimal ATM access and cards are not readily accepted. The terms buy and sell are from the perspective of the provider doing the exchange. This is the sell rate when the provider takes your local currency (USD/GBP/Euro)and "sells you" a foreign currency. When you return from overseas back home they are "buying" your foreign currency thus you use the buy rate. Another option you may be quoted is whats called a cross rate which occurs in the exchange of currencies that do not include the local currency (such as being in Canada and exchanging US Dollars for Euros).
3) Cards: Either Debit/ATM or credit cards you can either process a transaction at the counter or through an ATM. This method is generally safe and convenient, of course it can also be more expensive depending on the card, bank and ATM used. Due to transaction fees its much cheaper to make one large transaction at an ATM to withdraw cash then to use the card at individual merchants as each transaction regardless of amount will incur a transaction fee. One looking for an ATM the preference is:
(A) A government owned/operated AT: Such as a post office ATM.
(B) A National Bank: Often you will find one group of machines used for local cards and a separate group of ATMs used for foreign overseas cards. These often provide multi language support, though you are often limited to currency withdraws only. Understand that you may not be able to read the local language of any warning on the machine. These areas are generally more secure and safer.
(C) Regional Bank: You may not be able to use these with anything but a local regional ATM card.
(D) Airport/Hotel: These can be independently owned ATMs or bank ATMs they may have higher fees but are generally safe to use.
(E) Convenience Store: If the machine is well lit and in a recongnised area its very likely safe and probably used by the locals. Rates and fees can be a mixed, and language options may be limited.
(F) Other: These include ATMs in remote or isolated locations. They may not even be an ATM but a machine designed to skim your account information/PIN and then report they are out of order or other error. These machines be be monitored by criminals or thieves and potentially rob you or follow you home.
4) You can still get travelers cheques and if you belong to a credit union or at some banks they have no fee. These are generally very safe and can be replaced quickly. Few people use them anymore but in rural areas or regions with safety concerns these may be preferred as there is almost always some bank that will change them. Travex and Visa have relodable plastic card that allows you to have many of the same safety benefits with the convenience of using an ATM. I carry a few travelers cheques for emergencies. but generally dont use them any more.
5) Overseas Account: Depending on your Bank (mostly CITI and HSBC) you have the potential of opening a foreign account and receiving an ATM/Debit card before you depart and transfer currency before you even leave. When you arrive you can use a local ATM.
A few final parting suggestions:
1) Very few banks will accept actual minted coins for currency exchange so change them locally before you return home.
2) Be aware that you must declare any amount over USD$10K or its equivalent in foreign currency, or negotiable instruments (such as prepaid cards, checks, drafts or bonds). Also research what the import/export limits of foreign currency is. Some regions do not allow their currency to leave the country in any amount, or only very small amounts.
3) Learn how to identify authentic currency, either look for the watermarks against the light or the raised rough areas on a currency note. Colors and foils are some of the easiest to replicate. IF you do get stuck with some counterfeit currency you may try saving it until you return home and exchange it at an airport exchange. They usually do not know how to identify many of the less common currencies.
4) Be very protective of your bank passbook. In some regions you do NOT need a PIN to access your account with the passbook, and while it may sound horrible a teller may not be able to differentiate you from your residence card. In general keep your bank passbook in a safe place and do not carry it around with you needlessly.
5) Early in your arrival, there is a surreal use of foreign currency that almost feels like your not using real money. While it will take some time try to start thinking of costs and prices in the local currency. The sooner you live competently on the local economy the sooner you can budget intelligently. In JP for example coins have real value. JPY100¥ coins look, feel, and kind of spend like quarters but those are USD$1 the smallest paper note is JPY1000¥ but those are essentially USD$10 notes. You will be surprised how quickly and fast you can go though JPY10,000¥ notes like they are USD$20 notes.
6) You will invariably have a large number of coins, banks will take them and some ATMs will accept coins. My preferred method is to deposit them on my metro cash card though the IS business office.
7) Budget your daily expenses in cash. In many regions the ability to use a credit/debit card can be very limited.
8) Be wary of Scams, research how to identify tourist police if the region has such a thing.
Common Scams:
1) Touts: Cute college girls handing out fliers for various bars, arcades, etc. Often the scam is getting you in the door to order a few super overpriced drinks or cover/table charges. You get a menu with reasonable prices and think youll have a drink and leave. Then get the bill and find out there is a very high minimum/door/cover/table charge. Sometimes youll find a very attractive girl or woman who will sit next to you and starta conversation. Seems totally innocent until you realize that shes a hostess of some kind and a few minutes of conversation has a huge cost.
2) Taxis: Either insist on the meter or negotiate the price for your ride before getting in. Sometimes you find drivers who have figured out how to manipulate their meter or use their mobile and insist after the ride that they are off duty and are anew Uber or Lyft driver that just came to the area.
3) Beggars: I am not talking about the poor with a bowl or plate on the sidewalk that dont hassle you. The current scam is to dress up as monks in Buddhist robes who will offer you a sticker or some trinket with a blessing and then show you a book of recent donations for the blessing. The expectation is that you must match or beat the last or most recent donation, and that the sticker or trinket is a blessing that can not be taken back once accepted.
4) Technology: These are sophisticated but can include anything from a free wifi skimming scam with mis direction, to SMS alerts to various card skimming devices. A big one now is the dating SMS or app. The scammer uses a dating app to manipulate the matching algorithm, or you get a random SMS (text) with pics from some local and after convincing you they know you and you know them they arrange a meeting which turns into a tout scam or some kind of robbery. A variation of it for woman is you get an unknown text and very suggestive photo from some college girl suggesting your husband is having an affair with her, and she is just as hurt and betrayed as you are and you agree to meet some where out of the way or an apartment where once your inside its all a set up and your robbed.
5) Fake Police: Your sold something and then shortly after your confronted by what looks like a police officer (often a guy) and a "foreign police officer" (often a woman) the scam works because foreign police in many regions do not wear uniforms. She explains that youve just bought a stolen mobile card, or lottery ticket that is illegal for foreigners, or its illegal to drink in public or some minor crime, that if you pay a fine immediately then you wont need to be arrested, etc. If this happens just say one minute and speed dial the local police number, scammers will walk away.
6) Door Sales: Often a pizza scam, but Amazon is getting more common. A courier or delivery person has a package or pizza, which you didnt order or arent expecting. The delivery person apologizes and offers to sell you the pizza at a discount. You take the deal only to find out you bought an empty pizza box or other packaging that has maybe a rock in it.
7) Currency Swap: This is an old one, often used in seedier transactions or in night spots. There are two versions/ The first you give the person (bartender, etc. a note) they look at it and examine it and say no good not real, counterfeit and you take it back and give them another one. They palmed the first bill which was real and gave you back a fake note. The other version is you give them a genuine note for payment and then give your change in counterfeit or fake notes.
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wntriscoming
- Posts: 114
- Joined: Mon Oct 01, 2012 3:44 am
Re: Banking
"Its unlikely your school will auto deposit into your home bank, I only know of a handful of schools that do it. "
Really? Every school I've worked at, up until my current one, has done this each month. It was super convenient and I find myself really missing that, as it's a hassle to go to the local bank each month to wire money home. My old schools just asked how much we'd like sent to our account in the States, and how much we'd like left our local account.
I'd be interested to know if I just lucked out on previous schools, or if lots of schools auto-deposit to home accounts.
Really? Every school I've worked at, up until my current one, has done this each month. It was super convenient and I find myself really missing that, as it's a hassle to go to the local bank each month to wire money home. My old schools just asked how much we'd like sent to our account in the States, and how much we'd like left our local account.
I'd be interested to know if I just lucked out on previous schools, or if lots of schools auto-deposit to home accounts.
Re: Banking
@wntriscoming, my school in South Asia does the same--direct deposits USD in our home bank account, and we can designate however much we want in local currency in our local account.