The benefits of having an overseas or off-shore bank account are well-documented: better asset protection, ability to hold foreign currencies, exposure to higher interest rates and access to some of the healthiest banking systems in the world. However, before you go overseas in search of a banking solution, it is very important to know how you can access your money when you need it.
Here are four ways to access your overseas bank account.
1. Online/ Internet Banking
Internet penetration is increasing across the world and it's accelerating the provision of online banking services. About 423.5 million internet users, or one in every four, use an online banking service, according 2012 report published by ComScore.
Online banking is indeed a suitable way to access your overseas bank account. Although the range of services offered through e-banking platforms vary from bank to bank, you will typically be able to access your statements, check foreign exchange rates, review interest rates, make applications for loans or credit cards, initiate wire transfers and schedule regular payments.
Advantages of Online Banking:
- Convenient- With online banking, you don’t have to make any calls or fill out any papers. As long you have access to an internet-enabled device, you can log into your accounts and transact, regardless of your location. You can also easily monitor your bank balances and stay on top of exchange rate fluctuations. Time zone differences can also make international banking hectic. Sometimes when you want to call your overseas account manager you may be forced to stay up late, just because it is the time your bank on the side of the world opens for business. Online banking gives you 24-hour access to your account. You don’t have to schedule your day around your bank’s working hours.
- Cheaper services – Although banks must pay for internet infrastructure, the overhead costs of providing online banking services are way lower than those of traditional banking. As such, banks are able to provide internet banking services at lower rates. To the customer, this means lower transaction charges.
- Secure – Even in the face of increasing cyberattacks, online banking platforms are very secure. Banks deploy advanced encryption technologies to secure their systems.
Disadvantages of Online Banking:
- Security concerns – While banks do everything in their power to secure their e-banking platforms, nothing stops fraudsters from targeting individual customers. If you are not careful, you could be a victim of a phishing attack, a situation that could see you unknowingly handover your online banking details to scammers. Still, no IT system is flawless, so hackers can manage to penetrate online banking platforms.
- Manual review of complex transactions – Sure, e-banking enables you to access your overseas account quickly and conveniently, but some transactions, especially wire transfers involving large amounts of money, may need to be manually reviewed by bank staff. Review delays can be frustrating.
- Relationship with the bank – Although international banking means banks and their customers rarely have face to face meetings (in many cases they don’t meet at all), calling your overseas account manager helps to build a relationship with your bank. You get to talk to someone who can understand your unique banking needs. Online banking eliminates any chance you have of forging a good relationship with your bank. Unless a transaction is held up, or you are unable to access the online portal, you may never feel the urge to call the bank.
Since you can access wire transfer and reoccurring payment services through online banking, here is a brief look on how they work.
Electronic Wire Transfer
Wire transfer is the most commonly used method of transferring money between cross-border banks. With a few clicks, you can wire your overseas funds to a domestic account. You will need to provide the recipient bank’s name, country, address, SWIFT code and IBAN number, as well as your name, address and domestic account number.
Wire transfers are suitable for large amounts of money, you can capitalize on the best foreign exchange rates, and funds can be wired to any local bank. On the downside, these transfers attract higher charges and can take anywhere between 3 to 5 business days to clear.
Instead of going through the trouble of initiating a wire transfer every time you need money from your overseas account, you can schedule regular payments to any domestic account. These payments are ideal for people who need to regularly transfer smaller amounts for uses such as mortgage payments and pension remittances. For example, if you hold a pension account at a local bank, you can arrange for the transfer of a specified amount into the account on a specified date of the month.
2. Payment Cards (ATM cards)
Banks issue various payment cards that customers can use to access their accounts via an ATM machine. Millions of payment cards are powered by global payments processing companies such as MasterCard and Visa, so you can use your card to withdraw money from an ATM near you or pay for goods and services. The various types of payment cards include:
When you open an overseas deposit account, your bank will usually issue you with a debit card. Every time you use this card to make payments or withdrawals, the balance in your account will be deducted. You must maintain a positive balance in your overseas account to continue using your debit card. It is essential to note that debit cards cannot help you build your credit history, regardless of how frequently you use them.
Credit cards allow you to pay for goods and services on credit. Just like domestic financial institutions, overseas banks can approve you for one more credit card depending on your deposit or credit history. The credit attracts an interest, and must be paid monthly, or as arranged with your bank. Unlike debit cards, credit cards expose you to debt because of the risk involved. Also, if you have a domestic credit card, you can schedule recurring payments from your overseas account to the issuing domestic bank.
Unlike debit cards, prepaid cards are not linked to a checking account and similarly, prepaid cards shouldn’t be confused with credit cards just because they have the same card network logo like MasterCard, Visa or American Express on them. When you use a credit card you are borrowing money, however, with prepaid cards you are spending money you loaded onto the prepaid card in advance.
In general, payment cards have the following advantages:
- Convenience and flexibility— These cards enable you to make cashless payments, and are as such the fastest way to make purchases, whether online or at physical stores. And if you need money in cash, you can withdraw from the ATM at any time.
- Rewards – Many domestic and international banks offer a variety of incentives to encourage their customers to use payment cards. You can earn redeemable points every time you use your cards. Credit cards can also help you improve your credit record.
- Safe – With payment cards, you don’t need to carry a lot of cash with you. Even if thugs manage to steal your cards, your money is safe unless they also get away with your pin numbers. As technology advances, card manufacturers are designing enhanced security features into these cards so that they are able to detect fraudulent transactions.
Disadvantages of payment cards:
- Can greatly inconvenience you if stolen or damaged – To get a replacement, you will need to contact your overseas bank for a replacement and shipping takes time.
- Higher transaction charges – Although card payments don’t usually attract any transaction charges, foreign withdrawals can be costly, particularly if you make frequent withdrawals. Be sure to check the ATM transaction charges of various overseas banks before opening your account.
- Limited withdrawal amounts – To prevent fraud, many banks cap the daily amount you can withdraw from an ATM.
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Even though cheques are rarely used in international finance nowadays, they can still help you to access the money in your overseas account. When you open a bank account with an overseas bank, you can also apply for a cheque book. Rules for issuance of cheque books vary among banks, but it is common practice for them to issue cheque books to holders of checking accounts.
Advantages of Cheques:
- Safe – Although not entirely fraud proof, cheques are still the one of the safest methods to transact money, as the bank will only pay the person whose identity appears on it.
- Good for business – If you use your overseas bank account for business, you can use cheques to pay your suppliers, as the good old cheques are a trusted payment option.
- Easy to customize – When it comes to doing business, customization is crucial to brand development. Cheques are easily customizable since you can imprint logos and other trademarks on them.
- Ability to make post-dated payments – Cheques enable you to pay for goods and services, even when you don’t have the money to do so at the present time. If the balance in your overseas bank account is running low, you can write a post-dated cheque, just as long you fund your account before it is cashed.
Disadvantages of Cheques:
- Time consuming – Cheques must be physically presented to your local bank for the payment to be processed. Also, international cheques take longer to clear- sometimes longer than a week. This is because a centralized cross-border cheque clearing system doesn’t exist.
- Some local banks don’t accept foreign cheques.
- Cheques can be dishonored for various reasons, including using a signature that doesn’t correspond with the specimen signature on your overseas account. If your cheque is dishonored, expect your local bank to charge you for the service nonetheless.
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PayPal is an online payment processor that works in over 202 countries and supports at least 25 currencies. If the processor works in both your home country and that of your foreign bank, then it can be a suitable method for accessing your overseas funds.
All you have to do is log into your PayPal account, link it with your overseas bank account and then select the add funds option. Alternatively, you can ask your bank to pay money into your PayPal account. Once the money is in your PayPal account, you can either spend it online or transfer it to your local bank account.
PayPal is convenient and fast. Money sent or paid into your account shows up in a matter of seconds. On the downside, it can take up to a week to transfer the money from PayPal to your local account. Depending on your location and account verification status, PayPal can also limit the amount of money you can withdraw at a given time.
Those are pretty much all your options for accessing your overseas bank account. But if you are a globe trotter and you happen to find yourself in a country where your foreign bank has a branch, you can always walk in and do one or two transactions yourself!
Finally, be sure to research various overseas banks before opening an account. Specialist companies like Starting Business can help you find a bank that suits your needs.