If you’re a U.S. citizen you’ll never be able to walk away from the dollar completely—even if you move overseas. Likewise if you’re a Canadian or citizen of another country—it’s hard to totally divorce yourself from your national currency. Here are two reasons why…
1. You Can’t Divorce the Tax Man
No matter how irreconcilable your differences, if you’re a U.S. citizen you are obligated to file your annual tax returns, no matter where in the world you choose to live or work. If this means you’ll owe money to the IRS, then you’ll need to pay that nut in good old greenbacks. If you’re lucky enough to get money back, it will be sent to you in dollars, too. (You can’t have it directly deposited to a foreign account—only to bank accounts located in the U.S.)
2. Banking Can be Difficult
It may be difficult to get a credit card in a foreign country unless you have an established credit history there. So when you move overseas you’ll want to hang on to your U.S.- or Canadian-issued credit cards. And, of course, you’ll need to pay those credit card bills with your national currency.
Most expats I know maintain a bank account at home for just these reasons. They may not leave a lot of money in it, but enough to pay debts like credit cards, taxes, life or health insurance policies. For emergency purposes, you may want to have a debit card attached to this account.
When you’re preparing to move overseas it’s a good time to assess your personal financial situation. Decide if your current bank and credit cards are the best for an expat.
Here’s what to consider: many banks issue debit cards that come with a hefty fees for foreign transactions or foreign currency exchanges. Same with credit cards. These fees can add up. Withdraw 4,000 pesos in Mexico or 150,000 colones in Costa Rica, for instance—about $300—and you may end up paying $15 or more in fees.
The solution is obvious: look for banks and credit card companies that don’t charge these fees and move your accounts there before you leave home. There are just a couple we know of that don’t. And remember to choose financial providers with easy-to-use online banking interfaces.
If you’re planning to move to a foreign country, managing your personal finances is a critical issue. And, of course, there are other issues you’ll need to address—like taking your pets or household goods with you…the best residence visa for your personal situation…how to find a job, or open a bank account.
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