As a tax accountant to US expats, I am regularly asked about bank accounts and credit cards. Most often, the main discussion point has to do with the foreign transaction fees that comes into play when using a US debit or credit card. Many banks charge a fee when you withdraw local currency at an ATM. It can range from US$ 1 to US$ 5 per transaction, and sometimes 1%-3% on top of the fixed dollar amount. Similarly, foreign transaction fees are assessed when using a debit or credit card to make purchases at a store or restaurant. As a result, one can rack up hundreds of dollars in fees per year.
Needless to say, choosing the right bank can mean big savings for full-time expats and people traveling abroad over an extended period. Aside from foreign transaction fees, there are additional factors to consider when evaluating a bank, including:
Exchange rate used to convert foreign transactions to USD;
Wire transfer charges;
Monthly account maintenance fee;
Minimum balance requirement
Our research has identified three banks that clearly stand above the crowd.
Top 3 Banks for US Expats
1. _Capital One 360_: The best features of this bank account is no foreign transaction fee when using an ATM overseas (however, the local bank may charge a fee). Capital One utilizes very competitive exchange rates, much better than changing money at a local bank. There is no account maintenance fee and no minimum balance requirement. Capital One credit cards have similar benefits (read below).
2. _Charles Schwab Bank_: Like Capital One, Schwab does not charge a fee when using a foreign ATM. Almost incredibly, Charles Schwab Bank offers reimbursement for ATM fees charged by the local bank. There is no account maintenance fee and no minimum balance requirement. To open a Schwab bank account, however, one also needs to open a brokerage account – so there is an additional step involved. The only negative is that international wire transfers are not allowed.
3. _HSBC Bank_: This bank’s value proposition is quite different. Whereas Capital One and Schwab are basically online banks, HSBC has a huge global footprint. Therefore, it can offer its international-oriented customers the ability to open bank accounts in multiple countries. Wire transfers between HSBC accounts are free. In short, HSBC is a good pick if one needs a bank account in a foreign country where HSBC operates.
_In 2013 HSBC in Peru changed their name to Banco GNB._
Now let’s move onto credit cards. The criteria that we used in our assessment include:
Foreign transaction fee;
Account maintenance fee;
In our opinion, there are three credit cards that are definitely worth considering.
Top 3 Credit Cards for US Expats
1. _Chase Sapphire Preferred_: The best feature of this credit card is the rewards program. Kiplinger’s Personal Finance named Chase Sapphire the best credit card for flexible travel redemption (July 2016). There are a lot of bonus points one can earn within the first 3 months of opening an account. Importantly, there are no foreign transaction fees. The big negative with this card is the annual fee. There is none during the first year. However, Chase Sapphire charges $95 per year thereafter.
2. _Capital One Quicksilver_: No foreign transaction fee. No annual fee. The rewards program is quite good (although not as good as Chase Sapphire). Fraud coverage is excellent (zero liability if the card is ever stolen or lost). The Quicksilver card is available only as a MasterCard.
3. _Capital One VentureOne_: The pros are basically the same as with the Quicksilver card. The VentureOne card is available only as a Visa.
To recap, choosing the right bank and credit card relationships can translate into big savings. For the average expat, Capital One seems to be a good choice for both banking and credit card. Depending on an individual’s particular situation, however, it may be more advantageous to mix and match (e.g., Schwab Bank with Chase Sapphire).
For information on personal finance and tax-related topics, visit us at: holaexpat.com.
_This article was written by John Ohe – IRS Enrolled Agent and CFA. John is a partner at_ _Hola Expat_, _a firm that specializes in tax services for U.S. expats._
_If you would like to submit a question, email: [email protected]_
_Disclaimer: The answers provided in this article are for general information, and should not be construed as personal tax advice. Tax laws and regulations change frequently, and their application can vary widely based on the specific facts and circumstances involved._
Tired of racking up transaction fees when withdrawing money abroad? Take a look at this quick list for US expats living or traveling abroad.
Now that you're here:
We're asking you, our reader, to make a contribution in support of our digital guide in order to keep informing, updating and inspiring people to visit Peru. Why now? In our near 20-year journey as the leading English-language source on travel in Peru, we've had our fair share of ups and downs-but nothing quite like the challenges brought forth in the first quarter of 2020.
By adapting to the changing face of the tourism and travel industry (on both local and international levels), we have no doubt we will come out stronger-especially with the support of our community. Because you will travel again, and we will be ready to show you the best of Peru.
Your financial support means we can keep sharing the best of Peru through high-quality stories, videos and insights provided by our dedicated team of contributors and editors based in Peru. And of course, We are here to answer your questions and help whenever you need us.
As well, it makes possible our commitment to support local and small businesses that make your visit an unforgettable one. Your support will help the people working in these industries get back on their feet once the world allows us to make our dream of enjoying everything Peru has to offer a reality again-from its mouthwatering gastronomy, thriving Amazon and archaeological wonders such as Machu Picchu.
Together, we will find a way through this. As a member of our community, your contribution, however big or small, is valuable.