Before you moved abroad you may have thought that a bank account was a bank account – i.e., that there were few if any variations on the current account theme! However, as soon as you move abroad and begin contemplating how you’re going to manage your money, you may well discover that there are different types of offshore bank account to choose from.
Some are actually just the repackaging of a plain vanilla current account – jazzed up to catch your eye! Others have very real and clearly definable advantages that some expatriates or international businesspersons may be looking for.
In terms of the different types of offshore bank account you can access they include international accounts, multi-currency accounts and business bank accounts. Some banks then offer different levels of bank account – from a premium or premier account to a simple current account. So which one is most suitable for you?
An International Bank Account
Nowadays most legitimate offshore banks, such as the international arms of all the high street banks in the UK, have re-branded their personal accounts as ‘international bank accounts’ rather than offshore bank accounts.
This is simply because the term ‘offshore’ has unfortunate illegal and immoral connotations.
Therefore an international account is simply the new name for an offshore bank account in the majority of cases.
For expatriates an international bank account is the most frequently chosen and utilised type of bank account. The word international sums up the true flexibility of this type of account.
It’s an account type that allows account holders to access their funds no matter where they are in the world. This can be done with an international ATM/debit card, online or over the phone to a 24/7 call centre service.
If such accounts are being directly marketed to expatriates, then they often come with additional features such as having an international wealth or account manager assigned to a client to assist with investment services for example.
Such accounts are often offered in different currencies, interest is paid without the deduction of taxation, and international monetary transfers are easy to achieve.
Premium or Plain Vanilla?
As stated, many banks offer a couple or a few variations on their simple international bank account for expats. HSBC have a premier or an advance account for example, Barclays has iBank Plus or iBank accounts…
The differences are in the features, fees and minimum account balances.
The more advanced a bank account, generally the greater the so-called relationship balance a client has to maintain with a bank. For example, you may have to have tens of thousands of pounds banked, saved, invested or on a mortgage with a given bank to have access to their premier international account.
With this account you may enjoy low or no charges, special features and benefits such as international airport lounge access or international travel insurance for example.
However, because globally most investor protection schemes only protect up to a certain account balance per institution, and as anyone knows having all your fiscal eggs in one basket is never a good idea, you may opt to go for a less ‘premium’ account type.
Generally speaking, the less advanced your international bank account, the more you will pay for the services on offer.
When choosing an account look at the institution/s you favour and compare and contrast account terms and fees with proposed benefits. And finally, do not be seduced by all the bells and whistles of an advanced bank account if you won’t actually utilise any of the ‘free’ benefits being sold as reasons to choose such an account.
A Multi-Currency Offshore Bank Account
Whilst the vast majority of international accounts come in a choice of currency, some expats and international businesspersons need to bank and transact in more than one currency. In the past such individuals have quickly incurred high charges for international transfers, and suffered fees and also losses when transferring between currencies.
The globalisation of banking business has led to the creation of multi-currency offshore bank accounts. These are single accounts beneath which an account holder can have multiple strands, each in a different currency.
So, an account holder can have a euro account, a sterling account and a dollar account all beneath one multi-currency offshore bank account number for example.
These accounts are specifically designed for those who need to move money between countries and currencies and they may come with preferential rates of exchange, lower or no fees for international transfers etc.
Their basic structure will be the same as plain vanilla offshore or international bank account, but they will be much more suitable for anyone who has to manage their money across different currencies and countries.
Not all banks offer multi-currency bank accounts, therefore if you specifically require one, do enquire directly with your preferred institution/s. What’s more, not all banks offer the range of currencies you may require.
It’s worth noting that some banks offer different rates of interest on the different currencies too, so an account holder will need to keep an eye on their account balance to ensure it is correctly spread between currencies to enjoy the best interest rates possible.
Account fees and minimum balances usually apply; additionally you may find that you still get better rates of exchange and/or lower fees for moving money around the world from dedicated currency brokers rather than your bank.
Offshore Business Bank Account
With the development of the Internet, nowadays so many companies literally have a global presence and have found themselves doing transactions with individuals and companies around the world. This means that even sole traders can have a requirement for an international business bank account.
In the past only global corporations had a legitimate need for an offshore bank account, nowadays anyone can have one and anyone can potentially benefit from one.
Another reason why some directors choose to have an offshore business bank account is because if they’ve been made bankrupt in their home country they cannot have a company account. However, they can potentially have an offshore account for their company as they will not have been made bankrupt in the jurisdiction in which the account is being opened.
Tax benefits can also be a legitimate reason for opening an offshore business bank account for some people – for example, those who can reside in a country 100% free of tax as long as they don’t do business in that nation can instead operate their company offshore.
Such accounts usually have the same features and flexibility of an international current account, but all will carry fees and charges. It will also be critically important to choose a legitimate jurisdiction which customers and clients will feel comfortable sending money to or receiving funds from.
Private Offshore Bank Account
The final type of offshore bank account to mention is a private bank account. These are usually accounts offered exclusively to high net worth individuals or wealthy companies, which receive a personal introduction to an exclusive institution.
With the streamlining of services and the removal of the personal bank account manager for example, all banks are now pretty much the same in terms of the customer service levels they offer. However, some clients require a much more personal and hands on approach to the management of their financial affairs.
A private bank account can be ideal for such an individual. They will benefit from having their own personal named banker, with whom they will have a direct business relationship. The personal banker will handle the management and even investment of their portfolio for example.
Which Offshore Bank Account is Right for You?
From reading the above descriptions of the types of offshore bank accounts typically available, you may well have identified the type of account you’re after. In which case it will be up to you to research the institution that offers you the best account option from their range.
The Internet is a powerful research tool as all international banks actively promote their account options, features and benefits online.