Are you trying to determine the benefits of an international bank account? Then, this article is for you. We’re going to dive straight in and cover the specific benefits that attract so many people to banking offshore. We’ll also explain why keeping at least some of your money outside your home country makes sense no matter what.
- Opening an international bank account can help with asset diversification
- Non-residents, foreign business owners, expats, and digital nomads can open bank accounts internationally
- There are safer banking jurisdictions and banks overseas
- Most foreign non-residents can benefit from international bank accounts
For many people, the most important benefits of international bank accounts include convenience and the ability to access safer banks in stable banking jurisdictions. But, you can also benefit from enhanced asset protection and tax benefits by banking in the right countries. Of course, by choosing a bank that is located in a jurisdiction with a strong rule of law, you can also protect your deposits from corruption, theft, and unlawful seizure.
If you’d like to get a head start on international bank account opening then download our FREE Non-Resident Banking Starter Guide right now!
Here’s a look at the top benefits that most people access when they open an international or offshore bank account:
Benefits of Opening an International or Offshore Bank Account
wdt_ID Benefits of International Bank Accounts
Prevent Freezes & Account Holds
Protect Assets From Seizure & Levies
Lower Taxes (or Zero Taxes!)
Higher Interest Rates
Lower Fees for International Businesses
|wdt_ID||Benefits of International Bank Accounts|
|4||Prevent Freezes & Account Holds|
|5||Protect Assets From Seizure & Levies|
|7||Lower Taxes (or Zero Taxes!)|
|8||Higher Interest Rates|
|9||Lower Fees for International Businesses|
Let’s begin by taking a look at some of the most accessible benefits that almost any international or offshore bank account can offer, convenience.
With that said, feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Convenience Benefits of International Bank Accounts
- Safer Banks
- Safer Jurisdictions
- Prevent Freezes & Account Holds
- Protect Assets From Seizure & Levies
- Asset Protection Benefits of International Banking
- Lower Tax Benefits of Opening Offshore Bank Accounts
- Interest Rate Benefits of International Banking
- Lower Fee Benefits of Opening an International Bank Account
- Final Thoughts on Benefits of International Bank Accounts
Convenience Benefits of International Bank Accounts
If you work, travel, or live abroad, banking with an international bank in the country where you pay bills, get paid, or spend money is not only convenient, it’s sometimes a necessity. Other times it just makes life easier.
In France, for example, you need a bank account before you can lease an apartment.
Similarly, if you work in Singapore and get paid in Singapore dollars (SGD), it’s cheaper to receive your salary at a local bank. If it’s sent to your home country, you’ll get hit with unfavorable foreign exchange rates and international transfer fees.
Likewise, Canadian travelers and retirees abroad get penalized every time they use their Canadian ATM card to withdraw cash. Paying up to $15 in fees for each and every withdrawal in some countries. Having an ATM card from a local bank that allows you to withdraw cash in local currency is a godsend.
Another major benefit of banking internationally is the fact that there are safer banks and bank accounts overseas.
Shifting assets from a high-risk bank to a low-risk bank is just smart. It’s basic diversification.
If you keep all your eggs in one basket, or at only one bank in your home country–that’s risky. And as a result, you risk being financially cut off from your cash.
In fact, when there are financial shocks or market slowdowns, risky banks can fail. And banking customers get the short end of the stick. In the end, they’re cut-off from their savings and banking services and have to deal with disruptions like branch closures, no customer support, withdrawal restrictions, technical difficulties, etc.
So consider this a warning, if your home country is bankrupt, has fluffy bank regulations, and is like an episode of banks gone wild–be careful.
For example, if there’s an economic crisis or a global pandemic, banks with shoddy financials can stumble. In fact, overnight, banks can find themselves in a massive pit of trouble as loan repayments stop and investments turn toxic. Then, risky banks suddenly find themselves insolvent.
Above all, you need to protect yourself by moving some of your savings to well-capitalized foreign banks in a stable country.
Bankrupt governments, corrupt politicians, and draconian laws are dangerous. In fact, the rules and restrictions they impose can eat away at your life savings if you’re not careful. Banking internationally can protect you.
When governments start behaving badly or there’s an economic crisis, citizens head for the exits. And that’s usually followed by a mad rush to get money out of the country.
Why? Troubled governments impose exchange controls to prevent capital flight. After all, they desperately want to keep capital in the country.
South Africa and Argentina are economic basketcases that already have capital controls. In 2020, Lebanese banks slapped customers with withdrawal restrictions and refused to give customers US dollars (even if they had US dollar bank accounts). Likewise, China limits the amount of money citizens can take out of the country.
In Greece and Cyprus, banking customers had withdrawal limits. Then, when the banks simply couldn’t give depositors back their money, they received worthless bank equity instead of their cash.
Economies and political situations can deteriorate rapidly. Get your money out before it’s too late. Or, at the very least, keep some cash outside of your home country so you can be in a position of strength no matter what happens.
Prevent Freezes & Account Holds
Have you ever had your bank account suddenly frozen? Similarly, maybe you’ve had a bank refuse to give you your money? Many people have. It seems like it’s happening more and more these days.
Banking regulations are increasing. As a result, more banks are moving online, heavily regulated, and using AI and algorithms to sniff out compliance issues and risky customers.
For example, if a bank thinks you’re a risk, doesn’t like your transaction patterns, or a low-level employee labels your business as high-risk, you’re in trouble. Then, your bank account could get investigated, frozen, shut down, or all three.
In fact, transferwise is deactivating accounts and holding customer funds for 6+ months. Similarly, Paypal has done the same for years. And now, major banks are getting in on the trend. And now, account freezes are now used as a compliance tool.
As a result, one of the benefits of banking internationally is that you minimize the risk of account freezes and asset holds. So, by diversifying funds across multiple banks in different banking jurisdictions with different legal systems, you reduce risk and ensure you always have access to your money.
Protect Assets From Seizure & Levies
Your personal assets can be frozen in seconds. That is a fact. For example, creditors, tax authorities, or court judgments, can result in your money being legally seized, even before a trial for any wrongdoings.
So it’s no surprise that one of the major benefits of having international bank accounts is that your money is held in a foreign jurisdiction.
By keeping your money in a bank account overseas, in a banking jurisdiction that is subject to different laws and outside the reach of your home country, you can limit the power that any single government has over you and your money. Your account can’t be frozen or seized in seconds just because a creditor or a judge made a mistake.
Asset Protection Benefits of International Banking
If you keep 100% of your assets in the same country where you live and work, you’re exposed to serious (and unnecessary) legal and financial risk.
Consequently, asset protection is such a major benefit of an international bank account. In fact, by simply having an offshore bank account in a different country that is subject to different laws, you can minimize risk and legally protect yourself from a host of unpleasantries. And by having an emergency fund with an offshore bank account in a foreign country, you ensure that you always have access to your cash, no matter what happens.
Think about it. Above all, you could be left cut-off from your funds and financially stranded for any of the following reasons.
- You, your child, or your spouse gets in a traffic accident or injures someone
- A negligence or injury claim, even if you aren’t at fault and completely innocent
- A claim for injury or damages from someone who hurt themselves on your property
- Breach of contract – even if you’re not at fault
- A malpractice lawsuit if you are a licensed professional (doctor, lawyer, architect, engineer, etc)
- Likewise, frivolous lawsuits from disgruntled business partners, employees, or customers
- Divorce, separation or breakup from someone who wants a larger share of your assets
- Penalties, fines, or lawsuits for your business if an employee breaks the law
- False claims from creditors
- Seizure of your home, property, or other assets without due process
- Similarly, fraudulent claims from people looking to make a quick buck
Lower Tax Benefits of Opening Offshore Bank Accounts (or Zero Taxes!)
For individuals and companies in certain countries, a major benefit of bank account opening with an offshore bank is lower taxes–or no taxes at all. For that reason, lower taxes are often a major attraction to offshore banking.
A few examples…
A Singaporean company with foreign-sourced revenue going to an international bank account in Hong Kong doesn’t pay tax in Singapore. Zero.
Similarly, a UK citizen who is a non-resident of the UK will pay tax on any interest or savings income if the source of that income is in the UK. By simply opening an account with an offshore bank outside of the UK, that UK non-resident legally avoids tax.
These are just a few examples, and there are countless more. Each time, individuals and companies can drastically reduce or eliminate taxes by simply opening an international bank account outside their home countries, so long as they follow the laws that govern them.
Interest Rate Benefits of International Banking
Do banks in your home country have painfully low or negative interest rates? In many western countries, you have to literally pay the bank for the privilege of keeping money there.
Well, if you go abroad, things get interesting. In fact, another major benefit of international bank accounts is higher interest rates.
For example, you can find interest rates on fixed deposits (or certificates of deposit) in US dollars ranging from 3.5% to 6% overseas. And, depending on which country you’re considering, interest rates can go even higher.
But remember: There’s a reason why interest rates are higher – there’s increased risk somewhere. So be sure to do your homework. Understand the country, the banking system, and the fundamentals that make it tick.
For example, in Mongolia, deposits in US dollars are about 5%. But fixed deposits in the local currency, the Mongolian Tugrik, are much higher, 13% to 15%.
Double-digit rates in local currency look attractive at first. But since the inflation rate in Mongolia is also high, this takes a big bite out of your gains in local currency. In some countries, if you don’t look closely at the local economy and inflation rates, you can even end up with a negative return. So, be careful.
To get the highest possible return while still protecting your principal and limiting risk, consider fixed deposits in relatively stable currencies, like US dollars or Euros instead.
To learn more about higher interest rates and high-yield fixed deposits, check out the GlobalBanks Rates Index, which you can access for free. Additionally, we also share tips and recommendations for how to access the highest interest rates in the top offshore banking jurisdictions around the world.
Lower Fee Benefits of Opening an International Bank Account
Do you have an international business? Have you ever done business abroad? Then you know how expensive things can get if you bank in the wrong country.
Similarly, if you run a business that has any cross-border transactions or deals with other currencies, the benefits of offshore banking can be enormous.
International or offshore bank accounts help businesses keep costs low by allowing them to operate in their desired currencies. A wider variety of currency choices can instantly reduce foreign exchange fees, transfer fees, and mitigate foreign exchange fluctuations.
For example, let’s say a Canadian company is using a Canadian bank and they have to pay business expenses in US dollars. If the CAD plummets against the USD, then the Canadian company has to pay significantly more for those expenses.
And while the Canadian company could have a USD account at their Canadian Bank, Canadian banks often have unfavorable currency exchange rates and fees…. because, well, they can.
In contrast, if the Canadian company had a USD account at a US bank in the United States (an international bank account), they could minimize their currency risk, gain favorable exchange rates from USD to CAD, and enjoy the appreciation of the USD against CAD.
This scenario plays out for international businesses each day. Those that take the time to identify the international banks and bank accounts with the best rates for their operating currencies will save big and protect their businesses from currency fluctuations in the future.
Final Thoughts on Benefits of International Bank Accounts
The benefits of international bank accounts are many. The above are only a few examples.
If you want to learn more about the benefits of international banking, you can get started by using the information in this article or learn more here.
But if you want to know which foreign banks will accept you, which countries to target, the best account opening strategies to use, and the best ways to overcome tough paperwork requirements, then we’d be happy to help you on your journey.
If you’re ready to take action and start opening international accounts now, you can access GlobalBanks IQ, our dedicated international banking intelligence platform.
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