Pros and Cons of a Foreign Bank Account

There are definitely more advantages than disadvantages to owning a foreign account. This article describes in detail all the pros and cons of owning a foreign bank account, which will help you make the right choice.

Pros of a foreign bank account:

1. The ability to open an account in any currency or a multi currency account, which is very convenient if you are doing business with foreign partners from different countries.
2. The ability to open an account for both an individual and a legal entity.
3. If the country of your location is not quite financially and economically stable, then keeping funds in a foreign bank allows you to avoid the risks of devaluation, inflation, etc.
4. Tax optimization.
5. Foreign banks provide clients with maximum flexibility in terms of account use. Regardless of location and time zone, the account holder has 24/7 access to the funds in his account via Internet banking. In addition, one can pay with a payment card at points of sale, make purchases on the Internet and also withdraw cash from absolutely any ATM around the world.
6. High degree of confidentiality. Foreign banks are extremely sensitive to the issues of keeping the banking secrets of their clients and guarantee confidentiality. Residents of any country can be sure that information about their foreign accounts is under reliable protection. This is especially true under such circumstances as divorce, raider seizure, promissory notes and so on.
7. Wide choice of bank when placing a deposit. If you want to place a deposit in a foreign bank, but its interest rates are too low, you can issue a fiduciary deposit with this bank - when the bank places your funds in another bank, with more favorable rates, on its own behalf. Thus, you can, for example, place a deposit in Austria or Switzerland, at the rates of your local banks.
8. Minimal government intervention enables foreign banks to offer more interesting investment services and solutions to their clients.
9. Ease of account management. Most foreign banks working with non-residents provide their clients with personal managers who supervise clients on any issues.
10. Lack of exchange controls.
11. No restrictions on the amount of transactions.

Cons of a foreign bank account:

1. Minimum deposit and balance. Some foreign banks set minimum amounts to be kept in an account. Fortunately, not all foreign banks have such requirements. That’s why this issue must be studied separately for each bank.
2. Low deposit rates. Historically, the most popular banks for placing deposits are banks in Austria and Switzerland, but their interest rates are not very high (about ~ 1% depending on the amount and currency). However, it is possible to place a fiduciary deposit with such banks.
3. Service rates. Bank rates for non-residents are always higher than for residents. However, among foreign banks, there is a fairly large selection. You can choose a bank with the most suitable tariffs.
4. Cash transactions. There are two ways to withdraw cash from a foreign account - through an ATM or through the bank's cash desk in the country of its location. Direct deposit of cash to a foreign bank is possible only through the cash desk of the bank in the country of its location. Suppose, if you have an account with a Swiss bank and a debit card is tied to it, then you can receive cash through an ATM of any bank in any country, but depositing cash directly to the bank is only possible when you personally visit a bank branch in Switzerland.
5. Requirements for opening an account. As part of the “Know Your Customer” procedure, the bank may request additional documents from the beneficiary - resume, educational diploma, documents confirming the origin of funds (certificate from the place of work, certificate from the bank, certificate from tax authorities), and so on.

What about you? Have you already been using a foreign bank account for your business?