Introduction
If you’re wondering how much it costs to open a bank account, you’re not alone.
Unfortunately, there is no “one-size-fits-all” answer. It’s going to depend on where you want to open, the type of account you want to open, and other variables related to your unique client profile.
That said, in this article, we’re going to answer this question for you by sharing all of the variables you need to consider – based on our years of experience helping members successfully open accounts.
What Does it Cost to Open a Bank Account?
Bank account opening costs depend on a range of factors, including those related to the bank, country, and your own client profile. That said, there are specific variables and fees that you can calculate to quickly confirm how much a particular account will cost you. We share these fees and considerations below to help you quickly navigate your options.
And, if you stick around to the end, we’re going to share how you can start opening accounts at the best international banks for less than $50.
But, before diving in, if this is your first time visiting GlobalBanks, don’t forget to download your FREE Non-Resident Banking Starter Guide. It’s designed to help non-residents open accounts in the top banking hubs around the world.
Here’s a look at the specific topics we’ll cover in this article…
Table of Contents
2. Stop Wasting Money Opening at the Wrong Bank
3. How You Can Lose Money in the Wrong Country
Stop Wasting Money Opening at the Wrong Bank
Most people associate opening a bank account with saving money. But, what people rarely talk about is that opening bank accounts can be very expensive.
After all, banks need to make money somehow. And since international banks aren’t loaning out your cash like the big US or European banks, they need another way.
This begs the question, how do international banks generate profit?
One way that banks do this is by charging fees. Typical fees might include monthly or annual maintenance fees. They will also levy credit or debit card fees like any other bank. And they might have higher currency conversion fees than normal. We list more examples for you below.
But more expensive than the everyday charges of operating an account can be the cost of actually opening the account. In fact, when opening an international bank account, you might end up spending thousands of dollars.
Your expenses can include traveling to meet with the bank in person. Or you might hire a service provider or a lawyer to “introduce” you to the bank. We do not recommend this.
To learn more about the risks (and costs) of working with service providers, refer to our article Bank Introducers Are A Waste Of Your Time & Money – Do This Instead.
But service providers aren’t the only way that opening an account can cost you. Here are some of the main ways that people often lose money when opening accounts.
In Person Bank Account Opening Cost
When it comes to opening an international bank account, the biggest loss can come from traveling to visit the bank in person.
These expenses can accumulate quickly through flights, hotels, meals, and ground transportation.
And if you’ve decided to pay a corporate service provider or a lawyer for a “bank introduction”, you can easily double or triple the amount you spend.
Such instances might include account opening in Singapore or Hong Kong.
Here’s a quick snapshot of what the costs of account opening could be like if you are flying from the United States:
- Flight from Chicago to Singapore – $1,500
- Hotel for 4 nights, plus tax – $600 – $1,200
- Ground transport for 4 days – $250 – $450
- Meal expense for 4 days – $500 – $800
- Local SIM card – $30
Don’t get us wrong, Singapore is a beautiful place to visit. But as one of the most expensive cities on the planet, there are easier ways to go about the process.
Singapore Central Business District
Singapore Central Business DistrictAnd seeing as you’re traveling for the purpose of opening a bank account, don’t forget that you will need to be at the bank during regular working hours. So depending on how you value your time, you should factor in the cost of not being able to work during those days.
If you do plan on hiring a service provider to help you open an account, add US $1,000 to your costs, which will bring your expenses to US $3,000-US $5,000. And that’s not even including the account opening fees, maintenance fees, issuance and authentication of documents, or the opening deposit.
But Could This Approach Work?
Now, you might be thinking “If I get the account open, it would be worth paying $5,000!”
Well, depending on your situation, this might be true. But that’s only if you are successful and if the bank agrees to open a bank account for you.
Unfortunately, most people go into the account opening process without the right information. As a result, they not only end up approaching the wrong banks, but also go in without understanding the bank’s customer preferences, internal procedures, and account opening quirks – which often leads to failure.
In some instances, your only mistake might be approaching the wrong branch, the wrong banker, or saying the wrong thing. In instances like this, you’ll end up with an expensive whirlwind trip and no bank account to show for it.
This is a common experience that many of our members had before joining. They would spend thousands traveling to a country to meet with a banker, only to get rejected.
Often, bankers can’t tell you if you will get approved or rejected for a bank account until after you actually apply and submit all of your paperwork. But, there are exceptions and if you know where to look and how to ask, some banks will tell you before you travel halfway around the world.
Remote Bank Account Opening Cost
Sometimes, you don’t even have to travel to a foreign country to lose thousands of dollars.
Instead, you can simply choose the wrong bank. Or you might work with a service provider that claims to help with bank account opening. Alternatively, you might open an account at a bank with exorbitant hidden fees.
Depending on the country you want to bank in, and how desperate you are, service providers can charge lofty fees of between $1,000 and $5,000 upfront. For this small fortune, they will make an “introduction” to a bank. That’s it.
Again, before you engage an introducer offering “bank introduction” services, please read “Bank Introducers Are A Waste Of Your Time & Money – Do This Instead“
Of course, if you work with an introducer, there’s no guarantee that a bank account will be opened. And, in most cases, applications from these types of service providers are unsuccessful.
In rare instances, if the account is successfully opened, it’s typically because the applicant never actually needed an “introducer” in the first place and the bank accepted them on their own merit.
In other words, the applicant could have just applied to the bank themselves without an introducer.
Hidden Bank Account Opening Costs
Hidden fees are another way that opening a bank account can cost you money. And unlike your typical western retail bank, international banking fees can add up quickly.
To get started, some banks will charge you an account opening fee. In certain instances, this gets refunded or waived if your application is successful. In other instances, the bank keeps the fee as a processing fee, regardless of whether your application is successful or not.
If you’re applying to multiple banks, these account opening fees can become a burden. For this reason, it’s important to only apply to banks that match your customer profile and where you’ll have the highest likelihood of actually opening an account.
It’s also common for some banks to charge additional fees and have higher deposit requirements based on your nationality. This can happen if your citizenship comes with added administrative burdens or is perceived to be a higher risk.
For example, some international banks charge US citizens additional fees because they are more expensive to keep as clients. This is thanks to the additional reporting requirements through FATCA. Multibank in Panama is one example of a bank that charges such fees to Americans.
Bank Account Opening Costs at the Wrong Bank
If you’re lucky enough to successfully open an account, you might not be out of the woods yet. Unfortunately, even after getting an account open, the costs of banking at the wrong bank can still be high.
As mentioned, many international banks that cater to international clients, make their money by charging fees. This is in direct contrast to retail and commercial lending banks that many of us are familiar with in our home countries.
So, how do you make sure that your international bank isn’t charging you extortionate fees? Well, you need to know what the fees are before opening the account.
But you also need to know where to find hidden fees and how to avoid them. Similarly, you need to know which bank is best suited to you or your business, and which fee structures are best suited to your transactions.
Not surprisingly, fees can add up fast. In fact, it’s not uncommon for some small offshore banks to take a Swiss approach and charge you on an “a la carte” basis. Below you will see examples of fees that banks could charge you.
Examples of Hidden Bank Fees
- Account opening fee
- High-risk account fee
- Monthly maintenance fee
- Outbound wire transfer fee
- Inbound wire transfer fee
- Online banking fee
- Currency conversion fee
- Monthly debit card fee
- Monthly credit card fee
- 2-3% fee for debit card withdrawals abroad
- Monthly fee for fraud protection on credit card
- Account statement fee
- Bank recommendation letter fee
- Inactive account fee
- Account closing fee
- And more…
Now, most banks will charge many if not all the fees listed above. But there can be a wide discrepancy in the cost of these fees depending on the banks that you are dealing with.
For example, at certain banks, the fees listed above can easily amount to more than US $1,000 per year, depending on your account activity. And, that’s on top of what you spend opening the account.
That said, other banks may waive the majority of these fees completely depending on the amount you deposit when opening the account.
Bottom-line, understanding a bank’s fees and how you can avoid (or waive) many of them, can save you a lot of money and headaches in the future.
Bank Account Opening Costs at Difficult Banks
Beyond the direct cost of account opening and maintenance, you can lose money by opening at a difficult bank.
By difficult, what we really mean is a bank that is unable to provide you with efficient and timely service. Additionally, this can also refer to a bank that does not have advanced online banking.
As a result, you can waste significant time and money trying to execute transactions. And in the process, you might even lose face with customers or business partners.
Such banks include those that require you to show up in person to send an international wire transfer. They might also be disruptive to your business by losing transfers altogether. Generally speaking, these banks make it impossible for you to do business.
How Paperwork Can Hurt You & Your Relationships
Banks might also request an absurd amount of supporting documents to prove each incoming or outgoing transfer. This could include proof of identity from your clients, their personal or business information, invoices, or any agreements that you have with them.
When a bank is constantly asking for additional paperwork to support basic transactions – this can damage your business relationships by angering and annoying important customers, partners, and suppliers.
Incessant paperwork requests can also make your business look unprofessional. This tells experienced business people that you deal with low-caliber banks and may suggest that you’re an amateur. This can result in you losing partners, clients, or suppliers.
Depending on your business, losing key relationships like this could have a serious impact on your bottom-line. Several of our members have reported having experiences like this before joining GlobalBanks.
How You Can Lose Money By Opening At A Shady Bank
By shady, we mean banks that demonstrate shady characteristics. These can include poor KYC & AML compliance, a history of corruption, apparent ties to criminal activity, or simply being very accepting of high-risk and illegitimate customers.
You’ve heard stories about banks going bankrupt, getting shut down, and losing client money. And in some instances, those clients are unable to ever get their money back.
Take the banking system in the US as an example. During the years surrounding the financial crisis, from 2008 to 2012, more than 350 banks went into receivership. Yet, many Americans still consider the US banking system to be the safest in the world.
And there are plenty of bank horror stories outside of the United States as well. In recent years we have seen major scandals and closures play out across Andorra, Estonia, Latvia, and of course Cyprus.
With this in mind, a good rule to follow is that if your bank demonstrates any of the above characteristics, sooner or later, it will be shut down by regulators. At best, they’ll be forced to upgrade their compliance policies, close accounts or freeze customer funds.
How can this cost you money?
Generally speaking, you can lose money with a shady bank due to poor management and compliance practices. In other words, poorly ran banks don’t follow basic compliance standards. And this tends to attract bad characters who are involved with illicit or high-risk activities.
Alternatively, having lax KYC and AML standards could simply be a sign that the bank doesn’t care. This could be because banking isn’t their main business, so they let compliance slip. This can happen when banks are owned by individuals that view banking as a way to facilitate other business.
Lastly, banks with weak compliance standards could result in scrutiny or investigations by international or domestic authorities. And, when a bank attracts regulatory scrutiny, it can result in accounts being frozen or closed. You might be able to recoup your funds if this happens. But, it wouldn’t be immediate and it might not be in full.
Needless to say, if a bank is facilitating illicit activities or has lax compliance standards, it will likely attract unsavory clients. If you put your money in a bank like this, you’re exposing yourself and your money to increased risk.
Furthermore, banks that engage in such activities are also at a high risk of losing their correspondent bank relationships.
Why Do Correspondent Bank Relationships Matter?
The correspondent bank relationship is critical for smaller banks since it’s the only way that they can actually send or receive transfers. These correspondents effectively give your bank access to different currencies and transfer networks.
So your bank might have one correspondent for USD, one for EUR, GBP, and so on. If they lose one of these correspondent relationships, your bank won’t be able to transact in that respective currency anymore, rendering your money stranded.
We see this happen to a lot of smaller banks, especially those that are popular amongst the internationalization and digital nomad crowd. In fact, several banks that are predominantly recommended by internationalization gurus have lost correspondent relationships before.
This results in client money being stranded in limbo until the bank regains access to a correspondent bank. In most cases, banks are eventually able to secure another correspondent account, but only after client’s funds are stranded for months.
How You Can Lose Money in the Wrong Country
Choosing the right jurisdiction is one of the most important considerations when opening a bank account. And like choosing a bank, there are various factors that need to be assessed.
The first layer of questioning when looking at which country to open bank accounts in, should relate to your practical needs. In other words, do the country and its banks offer the services and protections you need?
Such practical considerations might include whether you will have access to your desired currency or do they force you to transact in the local currency instead.
Additionally, you will want to know whether the jurisdiction is solvent, well managed, and has a supporting legal environment to protect your assets. Another important consideration is whether the country will be able to support banks in the case of a sector-wide crisis.
You should also find out if the jurisdiction has introduced bail-in legislation. This is what the European Union and other countries are now doing. It passes on the outcome of a banking crisis to depositors. Meaning if you have your money in a bank that goes under, you and the other depositors are on the hook.
And of course, you will want to know whether the jurisdiction is or has recently been on a watch list. This can make it very difficult to send or receive money.
How Could Banking in the Wrong Country Impact You?
Finding yourself dealing with a bank in a country that doesn’t score well on the above considerations could result in you losing money. Your money could be tied up in an investigation, held domestically by capital controls, or otherwise used to fund the bail-in of a poorly managed bank.
And it pays to remember that this has happened before. Remember this scene from Cyprus in 2013?
Bank Account Holders in Cyprus Lining Up for Withdrawals
Bank Account Holders in Cyprus Lining Up for WithdrawalsThere are of course many other considerations when choosing a banking jurisdiction. Some of the considerations include economic, political, and regulatory concerns. Assess all of these factors when looking at banking jurisdictions. We cover these in detail in our article Where To Bank Overseas – How To Find The Best Country For Your Banking Need.
Ready to Start Opening a Bank Account in Mexico?
If you’d like to open a bank account as a non-resident and want to know how to keep your account opening costs low, we can help.
GlobalBanks IQ gives you everything you need to start finding and opening accounts. And we’ve done the legwork to help you navigate account opening while keeping costs low.
When you join GlobalBanks IQ, you immediately get access to our library of premium (members-only) reports. These include proven account opening strategies, country-specific banking options, and lists of banks for specific client types.
With GlobalBanks IQ, you will know exactly where to go and how to apply for an account as a non-resident.
To get started, click here to see if GlobalBanks IQ is the right choice for you.
