Expat and currency exchange

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DartThrower
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Expat and currency exchange

Post by DartThrower »

Hi Bogleheads

My wife and I are planning to live as expats for a period of time in Poland (and then elsewhere in Europe) and I'd like to know what is the best way to exchange dollars for foreign currency. What will keep costs low, be secure and minimize effort for a larger amount of money? After reading the threads on here about expat brokerages, we have tentatively decided on Schwab as our brokerage and will likely set up a checking account in our destination country as well.

We consider ourselves semi-retired and don't need to work, but will consider working as opportunities present themselves. Any money we make will just be supplemental to what we have already allocated i.e. mad money.

If anyone has an opinion on dedicated expat websites that provide the best tips on this and other expat issues please let me know. There is a lot of information out there on the web so I am always trying to find out what the most reputable sources are.
Our patience will achieve more than our force. -Edmund Burke
AlohaJoe
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Re: Expat and currency exchange

Post by AlohaJoe »

DartThrower wrote: Tue Feb 25, 2020 7:17 am My wife and I are planning to live as expats for a period of time in Poland (and then elsewhere in Europe) and I'd like to know what is the best way to exchange dollars for foreign currency.
There is no single best way that never changes and always works for every currency.

You'll just have to learn to do research yourself once in a while.

Interactive Brokers is often good. But they don't have every currency. OrbitRemit is often the best for the very small number of currencies it supports. Transferwise is often good. But I've also found situations where just doing a plain wire transfer from one bank to another was better than all of the above. It can also depend on how much you transfer, what kind of total relationship you have with the bank, etc. A friend of mine gets rates from OFX better than most of the above. But not everyone would get the same rate he does.

And over time the companies that used to offer the best rates no longer do. I remember when xe.com had the best rates. Then for a while it was OFX. In another year or two it could be some other new company with lower prices trying to win market share.
gtd98765
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Re: Expat and currency exchange

Post by gtd98765 »

DartThrower wrote: Tue Feb 25, 2020 7:17 am If anyone has an opinion on dedicated expat websites that provide the best tips on this and other expat issues please let me know. There is a lot of information out there on the web so I am always trying to find out what the most reputable sources are.
Here is a website that has been recommended before on BH: https://www.expatfocus.com/

An article from the NYT from this week: https://www.nytimes.com/2020/02/21/real ... -2020.html
How to Be an Expatriate in 2020

Thanks to leaps in technology, social media and the expanded mobile economy, more people are leaving home for good. Here’s how they do it.
curryitr
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Re: Expat and currency exchange

Post by curryitr »

I’m an ExPat living in Africa and we use Schwab. Since their debit card offers ATM withdraws with no foreign transaction fee and no ATM fees it makes it very simple to withdraw cash at decent exchange rates. We have had no need to open a foreign bank account and I’m glad because it makes things much more complicated with the IRS if you do.

Also, you can use a capital one QuickSilver card as a credit card. It has no annual fee, no foreign transaction fees, and 1.5% cash back.
fujiters
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Re: Expat and currency exchange

Post by fujiters »

If the amount of money you would need in a foreign currency can be easily obtained from an ATM, I recommend the Schwab ATM card. You get near mid market rates (I've observed the currency conversion to be about $1-2 higher than mid market rate for a $1000 withdrawal).

Just put as much of your foreign sending on a credit card that doesn't charge foreign transaction fees. As a bonus, you can get additional cash back by using a credit card.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham
AlohaJoe
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Location: Saigon, Vietnam

Re: Expat and currency exchange

Post by AlohaJoe »

curryitr wrote: Tue Feb 25, 2020 11:20 pm We have had no need to open a foreign bank account and I’m glad because it makes things much more complicated with the IRS if you do.
No it doesn't. The IRS doesn't care if you have a foreign bank account. I've been an expat for two decades and my foreign bank accounts cause zero additional work from the IRS.
ivk5
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Re: Expat and currency exchange

Post by ivk5 »

AlohaJoe wrote: Wed Feb 26, 2020 4:15 am
curryitr wrote: Tue Feb 25, 2020 11:20 pm We have had no need to open a foreign bank account and I’m glad because it makes things much more complicated with the IRS if you do.
No it doesn't. The IRS doesn't care if you have a foreign bank account. I've been an expat for two decades and my foreign bank accounts cause zero additional work from the IRS.
Just for the benefit of other readers, it's probably only responsible to point out that annual FBAR disclosures are required unless balance in foreign account never exceeds USD 10K. This is not hard, but not zero additional work either, and the consequences of disclosure lapses can be severe.

Annual Form 8938 filing may also be required if higher asset thresholds are met.
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happyisland
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Re: Expat and currency exchange

Post by happyisland »

ivk5 wrote: Wed Feb 26, 2020 6:36 am Just for the benefit of other readers, it's probably only responsible to point out that annual FBAR disclosures are required unless balance in foreign account never exceeds USD 10K. This is not hard, but not zero additional work either, and the consequences of disclosure lapses can be severe.

Annual Form 8938 filing may also be required if higher asset thresholds are met.
Yep. For my family the FBAR paperwork and other account declaration rigamarole is a pain in the neck.
AlohaJoe
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Re: Expat and currency exchange

Post by AlohaJoe »

ivk5 wrote: Wed Feb 26, 2020 6:36 am
AlohaJoe wrote: Wed Feb 26, 2020 4:15 am
curryitr wrote: Tue Feb 25, 2020 11:20 pm We have had no need to open a foreign bank account and I’m glad because it makes things much more complicated with the IRS if you do.
No it doesn't. The IRS doesn't care if you have a foreign bank account. I've been an expat for two decades and my foreign bank accounts cause zero additional work from the IRS.
Just for the benefit of other readers, it's probably only responsible to point out that annual FBAR disclosures are required unless balance in foreign account never exceeds USD 10K. This is not hard, but not zero additional work either, and the consequences of disclosure lapses can be severe.
FBAR is not from the IRS, though, which is what the OP was claiming. Filling out an FBAR also doesn't make things "much more complicated".
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DartThrower
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Re: Expat and currency exchange

Post by DartThrower »

Thanks for all the tips and insights. They will be a great place for to start researching.
gtd98765 wrote: Tue Feb 25, 2020 10:04 pm
DartThrower wrote: Tue Feb 25, 2020 7:17 am If anyone has an opinion on dedicated expat websites that provide the best tips on this and other expat issues please let me know. There is a lot of information out there on the web so I am always trying to find out what the most reputable sources are.
Here is a website that has been recommended before on BH: https://www.expatfocus.com/

An article from the NYT from this week: https://www.nytimes.com/2020/02/21/real ... -2020.html
How to Be an Expatriate in 2020

Thanks to leaps in technology, social media and the expanded mobile economy, more people are leaving home for good. Here’s how they do it.
Based on that NYT article it looks like we are more like millenials than baby boomers. Poland made it into the top 10 for millenials.
I wouldn't mind being mistaken for a millenial. :D
Our patience will achieve more than our force. -Edmund Burke
Naismith
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Re: Expat and currency exchange

Post by Naismith »

Schwab checking is great for ATM withdrawals, no foreign transaction fees. Also Capital One 360 and USAA.

We were only expat for 2 years. We have a small local checking account that we used to pay some local bills and transfer local funds for work reimbursement. I would simply go to an ATM, get money from one of our US accounts, deposit that cash into the local account to cover whatever needs. In that country, rent is paid once a year, so our local bills were minor: internet, phone, linkage to rideshare apps.

I moved my US cellphone number to Google Voice, so I was still able to do all the 2-factor text authorizations for our US banks. Then reclaimed that phone number when we returned to the US.
tryingmybest
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Re: Expat and currency exchange

Post by tryingmybest »

I would like to correct one of the statements in this thread. Earlier it was stated:
Just for the benefit of other readers, it's probably only responsible to point out that annual FBAR disclosures are required
However if you go to the if you look at transferwise's FAQs (https://transferwise.com/help/articles/ ... ansferwise), you see:
Where is my money stored?
TransferWise keeps your money in established financial institutions like JP Morgan Chase and
Barclays. Where your money is depends on which country your TransferWise account address is in
— if your account address in the UK, for example, we keep your money in Barclays, or other
financial institutions in the EEA.
Who regulates TransferWise?
TransferWise follows strict rules set by regulators in every country we operate in. These include the
Financial Conduct Authority (FCA) in the UK and EEA, the Financial Crimes Enforcement Network
(FinCEN) in the US, the National Bank of Belgium in Belgium, and many other regulators around the
world (https://transferwise.com/help/23/data-a ... nformation). The address on your TransferWise account determines which regulator you’re covered by.
In the U.S. it does not matter what matter what currencies you hold, your cash is held in an U.S. institution and is considered a U.S. account (for most states). You can look up the state licenses here: https://transferwise.com/us/state-licenses.
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JD Leonard
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Re: Expat and currency exchange

Post by JD Leonard »

Schwab or Fidelity cash management account debit card for free withdrawals abroad.

A good American rewards credit card with no foreign conversion fee (there is generally some spread above the market exchange rate, but it's eclipsed by the value of your card rewards).

For getting money back to the USA, I was surprised to find that Schwab has their own local Euro (and other currency) bank accounts to which you can do a SEPA transfer from a European bank account (for free depending on the European account's terms) and their foreign currency conversion is extremely competitive. Unfortunately they don't have an account in Polish zloty, but I wouldn't be surprised if you could open a Euro denominated account in Poland and very inexpensively convert from zloty.
- JD Leonard
Faith20879
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Re: Expat and currency exchange

Post by Faith20879 »

tryingmybest wrote: Sat Sep 19, 2020 5:21 pm I would like to correct one of the statements in this thread. Earlier it was stated:
Just for the benefit of other readers, it's probably only responsible to point out that annual FBAR disclosures are required
Hello tryingmybest, could you explain in more details what you are trying to correct in ivk5's statement? Not arguing, just trying to learn. I file FBAR every year faithfully and have the same understanding as ivk5. Don't want to foul up with the G'ment in case I misunderstood something.

Thanks.
tryingmybest
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Re: Expat and currency exchange

Post by tryingmybest »

FBAR is an acronym for Report of Foreign Bank and Financial Accounts. If you open a Transferwise account with a US address you will open a US account. There is no need to report a US account on an FBAR.
occambogle
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Re: Expat and currency exchange

Post by occambogle »

tryingmybest wrote: Sun Sep 20, 2020 10:59 pm FBAR is an acronym for Report of Foreign Bank and Financial Accounts. If you open a Transferwise account with a US address you will open a US account. There is no need to report a US account on an FBAR.
Is that true (account domicile in US) even if you have EUR / GBP or other currency sub-accounts?
Can you be sure the account is located in the US given Transferwise is a UK entity? I've read that it may be for the U.S. funds account, but what about the other currences?
Do you end up with multiple account numbers for each sub-account?
I'm a U.S. expat and have never used Transferwise so these may be false worries but I would be interested to open an account, but I just don't really fancy yet more FBAR entries.
TedSwippet
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Re: Expat and currency exchange

Post by TedSwippet »

occambogle wrote: Mon Sep 21, 2020 3:33 am I'm a U.S. expat and have never used Transferwise so these may be false worries but I would be interested to open an account, but I just don't really fancy yet more FBAR entries.
Well, if you can bump things up so that you hold 25 or more foreign accounts, you can pretty much avoid reporting any detail on them! Weird, but true. Logic and US tax law are barely nodding acquaintances.

https://www.fincen.gov/reporting-financ ... l-accounts
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