Foreign Perspectives

Archive for the ‘America’ Category

We’re sort-of looking for somewhere outside France to live at the moment. Not in a “lets’ go right now” kind of way, but in a considerably more musing about it all sort of way.

Initially, areas of Spain were first into the frame. It’s another European country, so that makes it relatively easy to move to. No real hassles about residence permits or such like things, same electricity supply and we can, once again, stick our Sky box under our arm and watch our normal programming.

However, Norman has suggested that Canada would be a much simpler option than we’d ever thought it would be. In fact, we never even considered it, thinking that it would be a rather difficult place to move to. Even our first playing around with the immigration points calculator throws up that we’re sitting at 80/100 with no problems and that’s well above the required level.

Very early days of course and we’ve not even ordered, still less read, the Living in Canada book.

One of the first shocks that you get when you start your own business is the extra cost of business accounts. Whilst the list of charges for personal accounts is usually fairly short, there seem to be untold numbers of things that banks feel the need to charge you for as a business. 

Now, you would sort-of expect that they would charge you if you’re depositing large amounts of cash in that there’s obviously work involved in handling it. You probably also know that they charge a percentage of your credit card sales too and that there’d be a charge for the credit card terminal too. But setting up the terminal? Providing the software for it? Surely not? 

Well, if you plan on taking everything from your own bank, yes, you probably will be charged for setting up the terminal and you probably will be charged for the software required to run the thing too (anything up to $500). Not only that, but try accepting card payments online and you’re potentially talking another $500 for the software that you’ll need to accept those payments too. 

That’s just for the standard Mastercard and Visa acceptances too. Add American Express or anything else and you add to your costs yet again. Even commonly used things such as the ability to process customer not present transactions is generally seen as another opportunity to charge you. 

What the bank won’t be too upfront about telling you is that you can get a merchant account from a separate organization. There are increasing numbers of these outfits around and the market competition is driving prices down with the likes of First Data providing free setup, free point of sale software and 24/7 service (something that, quite surprisingly, isn’t always provided by the banks) and things that you might expect to be standard but usually are billable such as reprogramming of the terminal.

Although your first thought might be that Americans in France would end up, for the most part, in the same areas of France as the Brits, this isn’t actually the case so funnily enough there is very little interaction between the two communities.

Generally speaking, the Brits end up in Brittany/Normandy, Dordogne/Loire, and Provence with the Americans largely confined to Paris, though obviously there are a lot of exceptions to this.

One of the more complete sites is Americans in France which seems to be a fairly complete reference guide for Americans aiming to move over here. Interestingly for me is that they still need to declare their income to the US tax authorities.

Of interest to the parents amongst us is the list of bilingual schools. You might think that the list on the site “must” be too short. There are bound to be more bilingual schools in France, aren’t there? Well, there might be a few more but there aren’t an awful lot more which is something you may want to factor in when you’re considering where in France you might want to settle. If you don’t arrange bilingual teaching for your children from about age 11-18, they will not be fluent English speakers and that will set them at a major disadvantage in their future life.

Not listed on the site are the international schools though there aren’t many of these either and bilingual is the way to go. International schools don’t raise children to fluency in both languages as you might expect.

Anyway, lots to see on the site.

So what are your options if you find yourself in need of an American bank account yet don’t actually want to visit America to open one?

There are three basic options that are known to work:

1. Form an American company and then open the account for it. This option is obviously a bit over the top if you’re only making $50 a month from your online empire although it’s probably the best way to go if you’re making a living online.

2. Try opening an account with a bank that operates both in America and your own country. The two most common options for this are HSBC and Citibank as they seem to operate in more countries than most.

3. Open a brokerage account with one of the brokers catering to non-residents.

In practice, the third option is by far the simplest for most people. Most American brokerage firms operating overseas cater exclusively for high net-worth clients (ie assets of $100,000 and more) but two offer accounts for the masses. Schwab has a minimum of $10,000, Etrade has a minimum of $1,000 although you can open it with zero cash upfront. How come the brokers can manage to give you a bank account when nobody else seems to be able to? Simply because the brokerage outfits operate as integrated international organisations whereas the banks don’t (eg Citibank USA isn’t the same as Citibank UK).

The etrade account is free for the first 12 months. After that, it costs $40 per quarter unless you meet their requirements which are either 1) $10,000 balance or 2) $1000 in automated credits per month or 3) one share trade during the period. If you don’t have the $10k and don’t have the $1k going in, then it is cheaper to buy or sell some shares than pay the $40. Our American bank account kit contains all the information you need to do this.

The second option isn’t quite so popular mainly because it isn’t as well known. The easiest way is if you have a premium account with either Citibank or HSBC in your own country as your relationship manager will be able to do it for you. These services are CitiGold and HSBC Premier but the downside is that the rough requirements for them is that you have $50,000 on deposit with them, or have an income of $75,000 or have a mortgage of $200,000 with them (roughly; the requirements vary depending on the country). It has recently become a good deal more difficult to persue this option.

Next easiest (and more economical) is to phone Citibank or HSBC in America and they’ll open an ordinary account for you on presentation of the appropriate ID and, sometimes, a bank reference. Citibank seems more geared up for this: call their International Personal Banking people on 001-813-604-3000. The latest information is that the banks are making this option almost impossible to use.

That’s just saved you between $5 and $250 which is about the going rate to buy the relevant information as above. Swiss bank accounts are slightly more difficult but definitely not worth paying the $1000 or more that I’ve seen quoted to provide you with the information. I’ll be covering Swiss banks in a later article, but if you can’t wait, pop a comment on this post and I’ll pass the information on to you (free!), likewise for other countries.

Don’t forget though that the first question you should ask yourself is: why do I need an American bank account? Google will only make payments into an American account if you live there and Citibank offers a US$ account in the UK (and other countries) which will let you deposit US$ cheques free of charge. It’s really only Paypal that requires such an account and even then that’s only if you live in one of the countries for which they don’t support withdrawals direct to your bank account.

This is part of our series on international banking which covers how to open and use accounts in various jurisdictions around the world including France, Switzerland and various offshore banking centers such as the Channel Islands, Isle of Mann and Bermuda.

An updated version of this article is on our expat banking site which also includes access to the detailed opening instructions that many people have asked for.

It’s been a while since I’ve been on one of the grand-scale holidays that I used to go on quite regularly but the point is coming up when it’ll be time for another one so I’ve started looking round the places that I went to in the past.