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Don’t Use Your US Bank Account When Living Abroad — Expat Horror Story

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Not having a local bank account when living abroad is one of the biggest mistakes you can make. When traveling or relocating to other countries, it’s easy to assume that your US bank will always be there for you.

But what if it isn’t? What if they close your checking account unexpectedly—or worse yet—freeze it, leaving funds inaccessible?

This was the nightmare that happened to me living in Portugal as an expat — and I want to share how it all went down and how I fixed it.

NEVER use your US bank when living abroad.

Banks always say they have your back.

  • No international ATM withdrawal fees
  • No foreign transaction fees
  • High daily spend limits
  • Fraud protection even while you’re “away”
  • Acceptable exchange rates

It all sounds amazing, like this is the one bank you can use for the rest of your life and it will take care of you. What an American dream.

Banks Don’t Like You Using Your Card Abroad

Yeah they say there are no fees, no penalties. They say you’re free to live your life and travel as you want. But what they don’t say is that there is zero support for expat banking.

It’s true that you don’t pay a fee to swipe your card. It gets converted to US dollars and everything’s settled. But banks don’t want you spending your money outside of the home country, especially for an extended period.

Swipe your card for months on end and some red flags will raise. Sooner than you know it, you’re hit with an account closure notice.

Banks Know Where You Access Your Account

You probably don’t think of this too often, but your IP says a lot about you. Banks use that to compare what you’re up to from where you are.

It’s easy to tap on your bank’s app on your phone and check your funds, move things around, pay a bill—whatever you need. Every time you do, your IP address is logged. It tells the bank what you’re up to from where.

Why would this be concerning? Because:

  • Even if you’re not swiping your card, accessing your account from another country is suspicious
  • If money transfers in a specific region happen often, it could signify money laundering
  • Your US bank isn’t an offshore bank, so it’s not designed for offshore use

It’s Expensive for Banks to Move Funds Around

Let’s say you don’t spend directly from your US bank account. Instead, you transfer an allowance over to some other service like TransferWise, N26, or Revolut, convert it within the app/website, and spend it locally.

Banks don’t like that. It’s expensive for them to send money out all the time. Besides, they don’t want money leaving their financial institution. They want money coming into it.

This is another reason they could close your account with very little notice.

What exactly happened to my US bank account?

They shut my account down! You probably guessed that.

I Got an Email from Customer Service

I didn’t open a ticket, I had no issues, everything was good. But I checked my inbox and there it was. An email from the customer service team titled “Account Inquiry”.

Confused, I opened the email and read:

“We’re informing you of your account closure. We cannot provide any further details or reasoning, so please don’t contact our support team for more info.

Send us your new account and routing numbers so we can transfer your funds out.”

Weird…so I called them to see if it was real. And it sure was.

I Opened a New Account Elsewhere

Because of the urgency, I quickly went to some other online bank and opened an account. It was surprisingly fast, which in this case is a good thing.

Then I transferred all my funds, all my recurring bills, subscriptions, etc., and informed my old bank that it’s ready for closure.

Then, I Investigated

Never give up, folks. I wouldn’t be able to get answers from my previous bank, but I can do my own research. You know what I found?

My bank didn’t like where I lived! They thought I was money laundering. Living outside of the states—even though I never used my card here—was the reason due to fraud and illegal activity suspicions.

The bank used my IP address, my location, against me. I thought I was safe just checking my balances and transferring a monthly allowance out to my TransferWise account was a good strategy. I was wrong

The Solution: Offshore Banking—Also Known as Expat Banking

Offshore banking sounds scammy, like you really are money laundering. But really, it just means you have an account that’s accessible from anywhere.

Remember how we had that sense of security thinking our US banks would be there for us until the end? Offshore bank accounts do provide that.

They’re designed for non-residents who want to perform some financial activity in their current location. They even exist in the USA for non-US citizens.

Nowadays, some banks call it an Expat Account. It’s the same thing. You’re an expat, so you gravitate to expat-related things. And not all of them come with the best perks or the best prices, so you do need to be selective.

Open One in Any Country

Essentially, offshore banking lets you manage your finances across multiple countries and sometimes in multiple currencies. So you can use this one account to get paid from your US clients in USD, your Portuguese clients in EUR, and your British clients in GBP.

Then, you can spend as you want! Travel to wherever you feel and swipe your card as much as you want. It really is the free way to work and live abroad.

Another pretty cool feature of offshore banking services is the ability to hold a brokerage account so you can open an investment account for international markets. Or even a credit card in your country. Or wire transfers that work for both US accounts AND IBAN accounts.

Some popular banks that allow you to open accounts in the US that are designed for expats come from:

  • Charles Schwab
  • Citibank
  • Capital One
  • HSBC
  • Chase
  • and a few credit unions

You need some US tax documents from the IRS, a US address, your social security number (SSN), a phone number, and a utility bill.

These could be a good solution for you, but you likely want to look at international banks instead. As a US resident, you don’t really need a US expat account. You need a foreign bank account for expats.

For these foreign accounts, you need a foreign address, tax documents, residency documents, and just a few other regulatory things. It’s quite easy to set up.

If you’re moving abroad, it’s extremely important that you plan ahead.

In fact, one of the biggest mistakes expats make is not planning at all and expecting everything to work out as they hope it will. That’s what I thought, and that’s where I failed.

Don’t make the mistake I did by using your US bank account when living abroad. The best way to live abroad is to open an offshore bank and stop rely on your US bank. You can do this with an account located in your new country, or you can open one elsewhere that provides even more benefits.

As an expat, you’re going to travel. You’re going to take your work with you. And your needs are going to change. Think ahead. Don’t plan for right now, plan for your lifestyle and the possibilities in front of you.

An offshore bank account allows you to avoid high fees and charges for international money transfers, so it will save you money in the long run. Let us find the best one that fits your expat life. Get in touch today.