Banking when moving to the US

[pauldwhyte]

Hey All

We are moving to the US for three years, working for a UK company and being paid in sterling (the company we already work for - visa's sorted). We have been advised by our bank to retain our UK accounts and transfer money to the US each month, to ensure that when we move back we have retained a good credit history. What are the thoughts of the forum on pros and cons of doing this please?

Thanks

Paul

[synthia]

If you are going to be paid in GBP, I think you would have to keep an account, since we don't have foreign currency accounts in the US. Since your company is going to pay you in GBP rather than set a GBP salary and pay it in the US in USD, you will incur all the transfer costs fees yourself. There will be fees at both ends.

[Bevdeforges]

I'd tend to go along with the bank here - in that it can be very difficult to re-establish yourself after an absence of three years. But I'd look into two other options for getting paid and transfering funds to yourself in the US.

If you will be working for the US branch or office of your current company, you might ask to see if they will pay your salary or at least some fixed portion of it to you in US dollars in the US. They can do an intercompany transfer or billing (which won't require them to actually exchange funds) and the US payroll department can handle the withholdings. (You'll have to pay US taxes while you're there anyhow.) If you don't have the US withholdings taken out by the US payroll department, you'll have to file quarterly estimates for federal and state taxes and things get complicated pretty quickly.

The other way to do it is to minimize the number of transfers you'll do in a year - no more than quarterly, better if you can manage once in six months. The transfer fees are outrageous, and you normally get hit on both ends of the transaction (UK bank and US bank).
Cheers,
Bev

[GDE]

I am not sure how the credit rating works in the UK, but in many countries it requires much more than having a bank account. It usually requires taking out loans, paying for credit card bills etc.

One of my main concerns that I would have, if I were you, is that often an Expat stay turns out to be much longer than expected. Many, MANY expats go abroad intending to stay for 1 year and it turns into 20 years.

Will you need to have a credit record in the USA? You will if you want to buy a car or a house on credit. If you have not developed a credit record in the USA while there, this could be a problem. Also, costs of transfering money internationally can be very high.

I would suggest to have both bank accounts at home and bank accounts where you live. Otherwise, everytime you buy something you will be encurring transfer costs. Many credit card companies charge you a fee for every purchase you make when overseas. You will be paying large trasnfer costs everytime you want to take money from an ATM (money machine).

If you have a bank account at home with electronic banking, you can transfer a lump sum to the US when you want and pay one transfer fee. Then you will be able to take the money out locally. You can probably also get a US credit card and start to develop a US credit record. Then if your stay turns out to be longer than expected you will not be penalized later on.

[Bevdeforges]

Originally Posted by GDE

If you have a bank account at home with electronic banking, you can transfer a lump sum to the US when you want and pay one transfer fee. Then you will be able to take the money out locally.

The only quibble I have with this is that I have found you can't do an electronic transfer of funds overseas - at least not through my UK bank. For a bank transfer, you have to send them a letter (snail mail), though I suspect you could set up a regular transfer in this manner (say, a set sum every quarter). It's up to you whether you have the funds exchanged on the UK end or on the US end, though I find it easier to let the UK bank make the exchange. Most US banks aren't used to doing international transactions. (And I've found that dealing with a smaller, regional bank rather than one of the national giants can really help with setting up a credit rating and accounts when you first arrive in the US.)
Cheers,
Bev

[GDE]

Originally Posted by Bevdeforges

The only quibble I have with this is that I have found you can't do an electronic transfer of funds overseas - at least not through my UK bank. For a bank transfer, you have to send them a letter (snail mail), though I suspect you could set up a regular transfer in this manner (say, a set sum every quarter). It's up to you whether you have the funds exchanged on the UK end or on the US end, though I find it easier to let the UK bank make the exchange. Most US banks aren't used to doing international transactions. (And I've found that dealing with a smaller, regional bank rather than one of the national giants can really help with setting up a credit rating and accounts when you first arrive in the US.)
Cheers,
Bev

Hi Bev

You may be right that in the UK they will not allow transfer of funds overseas for private purposes. I know that for UK businesses international electronic payments are very common, because we see them frequently in our line of work.

However, another alternative is to deposit a check from your UK bank account into your US bank account. A check will be slower and may be a bit more expensive than an Electronic transfer, but it will work. It will most likely be MUCH less expensive than the fees from ATMs and credit cards that you will pay each time you make an individual withdrawl or payment.

I dont think it is correct to say that US banks are not used to doing international bank transfers. I would think a better way to say this is that many bank employees are not used to international transfers. This is not limited to the US, this is true everywhere and many bank employees will give incorrect information. When calling any bank and asking for help on this matter, it is best to ask to speak to a supervisor or someone with experience doing international transfers.

I agree that when starting a bank account it is often better to start with a small regional bank. This is because they can be more flexible. Large banks often have strict, general policies that may prevent an Expat from opening an account unless they meet specific criteria, such as having a drivers licence or a positive credit rating. A newly landed Expat may not meet these requirements and a smaller bank may be more understanding.

As for credit ratings, you do not need to "set one up"...I believe that this is done for you whether you want it or not, buy the credit agencies such as TRW or Equifax once you have a credit card or something similar. However, your credit rating may be negative or positive. It is best to monitor these on a frequent basis and correct any problems or misunderstandings with your credit ratings.