I’ve written before ([1], [2]) about trying, as an American, to move some of my money offshore, both to diversify my currency holdings in case the dollar crashes, and to ensure that if my family needs to leave the United States quickly, we continue to have access to some of our money even if we are cut off from our American assets. (I am sorry to say I no longer consider it beyond the realm of possibility either that we might need to leave the U.S. quickly or that in doing so we might be cut off from our American assets.)
In my last update, I described the option of opening a Wise account, transferring money there, converting it there into a foreign currency, and holding that foreign currency in Wise, as giving at least some of the benefits of an offshore bank account. Since then, however, I’ve discovered another option which I think is important to share.
A friend in the fediverse, Kate Nyhan, suggested that I look at an HSBC Expat account as an option. To be eligible to open an Expat account if you aren’t already a rich HSBC customer, you have to meet one of these two conditions:
- have at least 75,000 British pounds (about $101,000 U.S. Dollars) to deposit and hold in the account; or
- have an annual income of at least 120,000 pounds (about $162,000 dollars) which is direct-deposited into your Expat account.
Obviously not everyone is going to be able to meet one of these, but it’s a lot easier (much less wealth required) to meet one of these than the conditions required for any of the other offshore bank account options I was able to find.
Opening an Expat account is a bit of a pain in the ass, but my wife and I managed to jump through all of the necessary hoops to open a joint account, and about a month ago we started gradually transferring money into it. We haven’t nearly hit the minimum balance yet, nor have I changed my paycheck direct deposit to go into my Expat account. I assume they’ll eventually come after me and tell me I need to do one or the other, at which point we’ll either borrow enough from our home equity to satisfy the minimum balance requirement or change my direct deposit.
We’ve ordered ATM/Debit cards for both of us for our Expat account, as well as an ATM/Debit card for our Wise account, so we can access the funds in both accounts essentially anywhere in the world.
Right now we’re holding half our money in a euros account at Wise, and the other half in a pounds account at Expat. If/when HSBC tells us we need to be satisfying the minimum balance we may end up moving the euros from Wise to HSBC.
If you’re curious, here’s how the mechanics look for us personally right now:
- We reserve enough cash in our American accounts for major expenses we’re anticipating, primarily tuitions.
- Once or twice a month we look to see if our American accounts have surplus cash over and above the reserve.
- If so, we transfer it into our Wise account.
- Once the money is in the Wise account, we figure out how much of it needs to be converted to euros and pounds to make our holdings in each equal, accounting for exchange rate swings since our last transfer.
- We do the necessary conversions from dollars to euros and pounds at Wise, which gives a very competitive exchange rate with very low fees.
- We leave the euros at Wise and transfer the pounds to our Expat account, for which there is no fee.
The following is for the benefit of anyone at the IRS who is reading this: we are not doing this to evade taxes or to hide money. We fully intend to report all of our foreign accounts as required on our American tax returns, and to pay taxes on any interest we’ve earned in those accounts.
