Using Foreign Bank Accounts Around the World

What is a foreign bank account?

A foreign bank account, or overseas bank account, is set up to hold funds with a financial institution based somewhere outside your home country. 

For example, if you are residing in the UK for 6 months, as a non-resident, you may want to open a bank account to manage your money while in the UK.

What is an offshore bank account?

An offshore bank account is another term for a bank account in a country you do not reside in. Foreign and offshore bank accounts are one and the same.

Why would you need to use a foreign bank account?

For those with spending a significant amount of time overseas, it is worth considering banking abroad. As some domestic banks charge for international transactions and foreign ATM withdrawals, having an international bank account can help you avoid these sort of charges.

Benefits of using a foreign bank account:

• Manage accounts and financial commitments in multiple countries 
• Send, receive and hold money in a country outside of the one you reside in
• Set up savings and investment accounts in different currencies
• Better management of foreign exchange
• Free foreign ATM withdrawals

Problems related to foreign bank accounts:

• Tax complications may emerge if you do not declare any interest earned in foreign currencies and deposited in your foreign account
• Fees and charges may apply, such as monthly maintenance fees
• Eligibility varies, depending on the country you are located 
• Foreign bank accounts are not regulated by the same financial authorities as your domestic bank account

Setting up a foreign bank account

Foreign banks will request the following information when opening a new account:

• Personal information: all the basic details such as full name, date of birth and contact information will be requested
• Proof of identity: passport, driver’s license or birth certificate are all acceptable forms of ID. Some banks might ask for two forms of identification
• Proof of address: a utility bill, lease agreement or tax document will suffice, as long as your full address can be verified
• Proof of status: this is not required for all foreign bank accounts but a work or student visa may be called for when setting up a bank account in certain countries
• Proof of funds: certain foreign banks might require you to deposit and maintain a minimum balance when opening an account

International bank transfers

If you are thinking of using a foreign bank account, chances are you may need to make regular international money transfers as a way of managing finances in multiple countries and currencies. If this is the case, learning what sort of international bank transfer services are offered by your new foreign bank is paramount. Oftentimes banks can charge an excessive amount of money for transfer fees and for anyone sending or receiving regular international payments, this may be a deal breaker. Find out what the common fees associated with international bank transfers are in this guide.

Bottom line

Foreign bank accounts benefit many people, and there are a multitude of reasons for using one. Many reputable banking and financial institutions offer suitable and secure options for foreigners. However, if, after reading this guide, you remain unconvinced about using a foreign bank account, perhaps virtual banking might be a better fit for you: What is a Virtual Bank Account? As always, we recommend using our comparison tool before initiating international payments of any kind.

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