A savings account, also known as a deposit account, is a way to safely store your assets and benefit from interest accumulation at the same time. Although many people have domestic savings accounts, having a foreign savings account also offers several concrete advantages.
If you are thinking about opening a foreign savings account, find out how to do so as well as understand what you can do with your account.
What is a Foreign Savings Account?
Before you get started, make sure you understand exactly what a foreign savings account is. First, it is an interest-bearing account. This means that you will earn interest, the rates of which can vary, depending on how much money you place in the account. Typically, the greater the balance, the more interest you can earn.
Unlike a checking account, most users don’t withdraw and deposit small amounts of cash from their savings accounts often. Instead, deposits are typically made every month or every few months, and withdrawals are minimal.
With a foreign savings account, the account should be in a jurisdiction other than where the account holder is a citizen. If you live in the United States, for example, then you might open up a foreign savings account in a location such as Belize.
How Do You Open a Foreign Savings Account?
Opening a foreign savings account is typically a straightforward process. At Caye International Bank, applicants should expect a minimum opening balance requirement of $1,000. This is in keeping with most international bank account programs.
There is a brief application required to open an international account, and there may also be a minimal monthly service charge. If FATCA applies, also known as the Foreign Account Tax Compliance Act, then there may be an additional fee levied. Account holders will need to verify their identity and their address before they can open a foreign savings account. Fortunately, all of this can be done online, making it more convenient than ever before to bank offshore.
Finding Accounts with Lower Fees
While there are many reasons to open a foreign savings account, one of the most overlooked is the fact that it is simply cheaper. Many people will already be familiar with savings accounts with nominal monthly fees. These are levied by banks to cover administrative and overhead costs.
In countries where the cost of living is lower, banks may be able to charge lower overall banking fees. That’s the case at Caye International Bank in Ambergris Caye, Belize, where the monthly service charge for a corporate or personal – demand deposit account is a mere $14.50.
Make International Purchases
A foreign savings account can be used the same way that any other savings account is used. While the primary purpose is often to accrue interest and maintain an increasing balance, it can also be a way to make payments overseas.
If you purchase a home in an offshore destination, for example, you could use your foreign savings account to pay for the home outright or simply to pay the deposit. This can help you avoid currency conversion fees and allow you to see your balance in the currency you plan on using the most.
Diversify Your Holdings
A big advantage of a foreign savings account is the ability to increase the diversification of your financial holdings. A savings account is already widely recognized as one of the safest, most stable ways to store your assets. The money is ready and waiting in liquid format, and it can be withdrawn whenever it is necessary.
If you only rely on domestic savings accounts, however, then you are fully reliant on that country’s banking system. By branching out to foreign savings accounts, you are creating a wider net of security. Should one banking system or government struggle, you will still have available assets in a different jurisdiction. For individuals worried about having access to their assets at all times, it makes sense to open up a foreign savings account.
In the United States, the accrued interest your accounts or investments generate are subject to taxation. Over time, this can become a substantial amount of money. One legal means of minimizing your taxation is to open a savings accounts in offshore destinations.
Having a foreign savings account means you will still be able to generate interest. In fact, interest rates are often higher if you look to banks overseas. However, some banking jurisdictions do not tax foreign investors. That’s the case in Belize, where there is no capital gains tax for foreign account holders and investors. This makes a foreign savings account a smart way to generate and then protect wealth.
Protect Your Assets from Frivolous Lawsuits
The United States is a litigious society. The same is true for many countries around the world, which means that certain wealthy individuals should be concerned about their wealth and how to protect it. Some lawsuits, for example, are simply instigated in the hopes of big settlement payoffs. While it is unfortunate, some wealthy individuals are targets simply because they have visible assets.
By moving assets into a foreign savings account, they are less vulnerable. Even if account holders become involved with frivolous lawsuits, they can rest assured that their wealth is stored safely and legally out of the country. In many cases, lawsuits can be avoided altogether because moving wealth overseas makes the lawsuit less desirable in the first place.
Generate Interest Through Your Savings
Virtually all savings accounts are interest bearing. That means that account holders earn interest just by placing money into a savings account. Domestically in the United States, interest rates don’t vary much. They tend to be the same across the board, and there is little incentive to choose a savings account over any other type of investment.
Overseas, there is far more variety. In some countries, interest rates are impressive. At Caye International Bank in Belize, the annual percentage rate, or APR, increases along with your account balance. If your lifestyle account balance is up to $25,000, then your APR will be 0.10%. Over $25,000, and your APR will be 0.25%. If your account balance surpasses $100,000, then you can expect an impressive APR of 0.50%. This creates plenty of incentive to continue saving and watching your net worth grow. If you do not need access to your money immediately then an option of a term deposit account can yield an interest rate of up to 3.50% depending on the term range selected.
A foreign savings account is a convenient and helpful way to manage your finances. You will be able to diversify your holdings, protect your assets and even generate more interest each year. At Caye International Bank headquartered on Ambergris Caye island in Belize, you can find the best foreign savings account for your financial needs.
Contact Caye Bank today for more information about foreign savings accounts.