Possible to open bank account in US or Australia as a foreigner?

[boroangel]

Possible to open bank account in overseas as a foreigner?

If one wants to diversify their financial holdings (cash) by putting them in banks outside Singapore, what are the possible ways to do it? Given that local banks do not gaurantee USD funds in Singapore (understand each bank gaurantees up to 50K worth of SGD), I thought it might be safer to place some USD overseas.


Is it possible to open a bank account in say US, UK and Australia despite not working , studying , holding a permanent residence there? I thought usually they need some proof of residence in the country.

How about holding cash in brokerages like Interactive Brokers? Does holding cash in IB mean your cash is held in an overseas entity?

Are there any tax implications to be aware of?

I also found some international bank accounts such as from Barclays:

https://wealth.barclays.com/en_gb/h...vices/banking/international-bank-account.html

Are these what we call offshore accounts? Will certainly appreciate your feedback and recommendations on international bank accounts if this is the best way to go.

 

[JuniorLion]

For most US bank accounts, you do need some sort of International Identification (e.g. Passport) to open. You also need to be physically be at the Branch to open, and you can't open online.

 

[sgdividends]

I did for Australia.

Not working , staying or having an address there.

Need to be at physical branch.

Interest will be taxed if it is above a certain amount...

Need to do activity in account as dormant account , they will sweep the funds to a certain account and it's a headache to get back .

 

[revhappy]

Interestingly, Singapore banks don't allow foreigners to open accounts unless they have some kind of pass like EP, DP, LTVP etc.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[BBCWatcher]

I agree with the other posters that physical presence is important if you want to open a U.S. bank or U.S. credit union account....

....But holding U.S. dollars in an insured way, and in an interest paying way, doesn't require a U.S. bank or U.S. credit union account. You could open an account at Interactive Brokers or Charles Schwab and, for example, buy U.S. T-Bills and/or U.S. Certificates of Deposit (CDs). CDs are insured up to US$250,000 (more if you're careful) through U.S. federal government deposit insurance. T-Bills are short-term U.S. government general debt securities, backed by the full faith and credit of the U.S. government. They are the safest U.S. dollar-denominated assets.

Let's suppose you want U.S. T-Bills. Now the question is IB or Schwab? Well, "it depends." IB offers the lowest currency conversion costs (in and out), and your minimum account opening is US$10,000. There's a US$10/month minimum commission charge, and that should easily cover your "typical" T-Bill purchases/repurchases. (Unless you're doing a lot of T-Bill trading.) If your account gets to US$100,000 or more in value, there's no monthly minimum commission.

Schwab, on the other hand, has a higher (but still quite reasonable) currency conversion charge in/out, and it has a US$25,000 minimum to open. But it charges $0, no markup, for buying T-Bills at original issue and for holding them to maturity. And there's no monthly minimum charge. There are lots of T-Bill auctions, so that works fine.

My understanding is that U.S. T-Bills are not counted toward your U.S. estate tax exemption, so they are not U.S. estate taxable (if held by a non-U.S. person, upon that person's demise). T-Bills (and Treasury bonds, for that matter) are U.S. tax free for non-U.S. persons, as long as you've filed a W-8BEN form with the broker.

You could also buy TIPS (Treasury Inflation Protected Securities), which are bonds/notes keyed to the U.S. Consumer Price Index (inflation rate), if that interests you.

 

[limster]

I did for Australia.

Not working , staying or having an address there.

Need to be at physical branch.

Interest will be taxed if it is above a certain amount...

Need to do activity in account as dormant account , they will sweep the funds to a certain account and it's a headache to get back .

yeah i found your blog post on how to apply very helpful.

my concern is internet banking, do they use australian handphone number as 2FA? so if no phone number, cannot i-bank? or do they issue security tokens?

I have a UK account, my bank uses security token for 2FA, so i-banking is no problem...

 

[sgdividends]

yeah i found your blog post on how to apply very helpful.

my concern is internet banking, do they use australian handphone number as 2FA? so if no phone number, cannot i-bank? or do they issue security tokens?

I have a UK account, my bank uses security token for 2FA, so i-banking is no problem...

For me, I don't need to use 2FA..just the username and password that's all.

Not secure but I don't keep much anyway as I want don't want to exceed the threshold where they tax the interest.

 

[tiertime]

For me, I don't need to use 2FA..just the username and password that's all.

Not secure but I don't keep much anyway as I want don't want to exceed the threshold where they tax the interest.

can i know which bank u opened with that do not need an australian address? what is the amount that they will start to tax interest?

 

[boroangel]

I agree with the other posters that physical presence is important if you want to open a U.S. bank or U.S. credit union account....

....But holding U.S. dollars in an insured way, and in an interest paying way, doesn't require a U.S. bank or U.S. credit union account. You could open an account at Interactive Brokers or Charles Schwab and, for example, buy U.S. T-Bills and/or U.S. Certificates of Deposit (CDs). CDs are insured up to US$250,000 (more if you're careful) through U.S. federal government deposit insurance. T-Bills are short-term U.S. government general debt securities, backed by the full faith and credit of the U.S. government. They are they safest U.S. dollar-denominated assets.

Let's suppose you want U.S. T-Bills. Now the question is IB or Schwab? Well, "it depends." IB offers the lowest currency conversion costs (in and out), and your minimum account opening is US$10,000. There's a US$10/month minimum commission charge, and that should easily cover your "typical" T-Bill purchases/repurchases. (Unless you're doing a lot of T-Bill trading.) If your account gets to US$100,000 or more in value, there's no monthly minimum commission.

Schwab, on the other hand, has a higher (but still quite reasonable) currency conversion charge in/out, and it has a US$25,000 minimum to open. But it charges $0, no markup, for buying T-Bills at original issue and for holding them to maturity. And there's no monthly minimum charge. There are lots of T-Bill auctions, so that works fine.

My understanding is that U.S. T-Bills are not counted toward your U.S. estate tax exemption, so they are not U.S. estate taxable (if held by a non-U.S. person, upon that person's demise). T-Bills (and Treasury bonds, for that matter) are U.S. tax free for non-U.S. persons, as long as you've filed a W-8BEN form with the broker.

You could also buy TIPS (Treasury Inflation Protected Securities), which are bonds/notes keyed to the U.S. Consumer Price Index (inflation rate), if that interests you.

HI BBCWatcher, this sounds like an excellent suggestion and I never thought you can buy treasury bills in IB.

1. IF I hold USD in a Singapore Multicurrency account, then there wont be any concerns with exchange rate. I will just do a direct wire transfer into IB account?

2. Can we also buy shorter term US treasury bills such as 3 months and 6 months?

3. https://www.marketwatch.com/investing/bond/tmubmusd01y?countrycode=bx

Looking at the above, does IB rates match exactly what the current T bill rates are?

4. In case something does happen to IB, for T-bills, are these still insured and we can get our money back?

5. Is there any real difference between CD and T bills since I think their interest rates should be about the same?

6. With these money held in IB or Charles Schwab where is the cash held? Is it domilced in US?

7. If I have no currency conversion concerns since I am already holding USD, is IB or Charles Schwab better for holding T bills and CDs?

Appreciate your feedback, you know so much!

 

[BBCWatcher]

HI BBCWatcher, this sounds like an excellent suggestion and I never thought you can buy treasury bills in IB.

And at Schwab.

1. IF I hold USD in a Singapore Multicurrency account, then there wont be any concerns with exchange rate. I will just do a direct wire transfer into IB account?

To send U.S. dollars stuck in Singapore to Interactive Brokers, you'd need to wire them to IB's account in New York. IB does not accept U.S. dollars in Singapore.

Schwab Singapore might or might not be able to accept U.S. dollars drawn on a Singapore bank. If they are, then Schwab probably wins this contest since they don't have any trading commission for T-Bills.

2. Can we also buy shorter term US treasury bills such as 3 months and 6 months?

You can buy T-Bills in any tenor, including 4 week T-Bills. The U.S. Treasury announces auctions here. As I write this, the next 4 week T-Bill auction is scheduled for May 15, 2018. The 13, 26, and 52 week T-Bills will be auctioned the following week.

Please note that cash, in any currencies, held at a U.S. broker (e.g. IB, Schwab) is U.S. estate taxable, if that's a concern. There is a single US$60,000 exemption for non-U.S. decedents. So, if this is your only U.S. estate taxable asset (cash at the broker), then one way you could fit within the exemption is to set up a T-Bill "ladder," with each T-Bill no greater than, say, US$50,000 and with each T-Bill maturing on a different date. Then you can keep recycling them.

3. https://www.marketwatch.com/investing/bond/tmubmusd01y?countrycode=bx
Looking at the above, does IB rates match exactly what the current T bill rates are?

At either IB or Schwab you're buying a real T-Bill, the genuine article. So you get exactly what the auction results are. IB charges a small trading commission for T-Bills, and Schwab charges $0.

4. In case something does happen to IB, for T-bills, are these still insured and we can get our money back?

IB (or Schwab) is the broker, and it's simply facilitating your purchase of T-Bills. The U.S. Treasury is your counterparty, and it has an excellent credit rating. If the broker were to collapse then the SIPC would step in, make sure everyone's securities are properly recorded, make investors whole (if necessary, as with cash held at the broker) up to at least SIPC insurance limits, and life goes on.

It's a hell of a lot safer than U.S. dollar cash in a bank in Singapore. It's the safest U.S. dollar denominated asset you can find. The only thing possibly slightly safer is to buy T-Bills (or other types of bonds) using Treasury Direct, without a broker, but I don't think Treasury Direct is open to non-U.S. persons. (Well, former U.S. persons who opened an account while they were U.S. persons can keep the account.)

5. Is there any real difference between CD and T bills since I think their interest rates should be about the same?

Below deposit insurance limits, not much. CD interest rates tend to be slightly higher since CDs don't really have much of a secondary market, and if you cash them in early you lose some interest. T-Bills can be sold before maturity very easily, if desired. (No guarantee on what price they'll fetch, but they're highly liquid -- almost as liquid as cash.)

6. With these money held in IB or Charles Schwab where is the cash held? Is it domilced in US?

The U.S. Treasury holds your money (U.S. dollars) while you hold a T-Bill. That's the whole point. It's U.S. government short-term borrowing.

7. If I have no currency conversion concerns since I am already holding USD, is IB or Charles Schwab better for holding T bills and CDs?

As mentioned above, if you can get U.S. dollars stuck/stranded in a Singapore bank (bad idea, but OK, you crossed that bridge already) into Schwab Singapore without extra cost -- if they'll take a paper U.S. dollar check drawn on a Singapore bank, for example -- then Schwab would be best since they charge $0 to buy T-Bills at original issue.

 

[boroangel]

Please note that cash, in any currencies, held at a U.S. broker (e.g. IB, Schwab) is U.S. estate taxable, if that's a concern. There is a single US$60,000 exemption for non-U.S. decedents. So, if this is your only U.S. estate taxable asset (cash at the broker), then one way you could fit within the exemption is to set up a T-Bill "ladder," with each T-Bill no greater than, say, US$50,000 and with each T-Bill maturing on a different date. Then you can keep recycling them.

HI BBCWatcher, hope I am understanding this correctly. If I put 200K USD, and I purchase them as 4 seperate 50K T-bills, this way I will exempt from any tax?

How about CDs...are these taxable and if so to what amount? Are CDs also insured in both IB and Schwab?

 

[boroangel]

BBCWatcher, just PMed u with another question if you don't mind.

 

[BBCWatcher]

If I put 200K USD, and I purchase them as 4 seperate 50K T-bills, this way I will exempt from any tax?

Assuming you are not a U.S. person, you will be exempt from U.S. taxes on T-Bills, but your dead body (your estate) might not be, depending on how you manage the cash.

If you should happen to die while you have >US$60,000 of U.S. estate taxable assets, then your estate will be subject to the U.S. estate tax. Cash (in any currencies) held at a U.S. broker counts, so US$200,000 (plus your death) would do it.

If you wish to avoid that problem, simply slice up your US$200,000 into, for example, US$50,000 chunks. Then "ladder" (i.e. stagger) T-Bill purchases, such that you don't have more than US$50,000 maturing at any one time. For example, if you buy 13 week T-Bills, then buying them every 3 weeks (US$50,000 per purchase) should work quite well.

As I write this, here are the tentatively scheduled upcoming 13 week U.S. T-Bill auction dates through July:

May 21, 2018
May 29, 2018
June 11, 2018
June 18, 2018
June 25, 2018
July 2, 2018
July 16, 2018
July 23, 2018
July 30, 2018

So, for example, you could do something like this:

$50K on May 21, 2018
$50K on June 11, 2018
$50K on July 2, 2018
$50K on July 23, 2018

Thus your T-Bills would have staggered maturities, and you should be able to reinvest them when they mature without having more than US$60K sitting in your account in cash at any one time.

Alternatively, just buy a little more life insurance to compensate for the U.S. estate tax liability. Or don't worry about it if it doesn't matter.

There is no U.S. income tax on U.S. government t-bills/bonds if you're a non-U.S. person, and if you have filed IRS Form W-8BEN with the broker.

How about CDs...are these taxable and if so to what amount? Are CDs also insured in both IB and Schwab?

CDs have exactly the same tax treatment (estate and income) as above. Your broker arranges placement of your funds with a U.S. bank or U.S. credit union offering the CD. Look for the four letters "FDIC" or "NCUA," which stand for "Federal Deposit Insurance Corporation" and "National Credit Union Administration." FDIC and NCUA are the U.S. federal government agencies that insure bank and credit union deposits.

The deposit insurance limit is US$250,000, but it's quite easy to exceed that. One easy way is simply to limit each CD to $250K or less, and to keep each CD at a different bank or credit union. Another way is to buy something called "CDARS," which automatically split your giant CD into smaller, federally insured pieces.

I'm not sure which CDs (and CDARS, if any) are offered at IB or Schwab, or what the fees are. I think I've only placed funds in a CD once via a broker, but it wasn't either of those two brokers. It worked.

SIPC insures the broker, up to US$250,000, and that's really for the cash you might have on deposit at a broker, before it's being invested (or in between investments).

If a bank or credit union folds, FDIC or NCUA steps in and, typically, another financial institution assumes all the deposits. The acquiring institution is not required to honor the remainder of your CD term. For example, if you place funds in a 12 month CD paying 2.0% interest, and if that bank fails 6 months into the CD, the acquiring institution might end the CD and return your funds to the broker, with accrued interest to that point. Or the acquiring institution might roll the funds into a new CD at a lower rate but allow you to withdraw. Bank failures are normally handled quite smoothly from the depositor point of view. Usually the FDIC or NCUA will shut down a failed bank on a Friday afternoon, and by Monday morning the funds are available.

 

[lifeislonggamma]

Interestingly, Singapore banks don't allow foreigners to open accounts unless they have some kind of pass like EP, DP, LTVP etc.

Sent from Xiaomi REDMI NOTE 4 using GAGT

Based on the experience of my foreign friends, I think it depends on who one happens to meet at the bank branch. Even for the same bank, different branches will have staff telling you a different story. Most of the time, the more 'kiasi' staff will say 'cannot open' due to the KYC and AML requirements.

 

[sgdividends]

can i know which bank u opened with that do not need an australian address? what is the amount that they will start to tax interest?

Nab. Google sgdividends Nab Australia bank account .

Putting a Singapore address is better as u will be taxed at 10% of your interest ONLY if your interest earned is above a certain threshold.

Putting an Australian address require u to put in your tax identification , and if u don't have..u will be taxed around 40% ( exact not sure)

Mine is below threshold , so I am not taxed.

Interest is 2.5% currently..used to be better

 

[lifeislonggamma]

If one wants to diversify their financial holdings (cash) by putting them in banks outside Singapore, what are the possible ways to do it? Given that local banks do not gaurantee USD funds in Singapore (understand each bank gaurantees up to 50K worth of SGD), I thought it might be safer to place some USD overseas.

If you new looking at USD deposits, then HK might be better than UK or Australia. HK banks accept deposit of USD notes without any fees.

 

[BBCWatcher]

If you new looking at USD deposits, then HK might be better than UK or Australia. HK banks accept deposit of USD notes without any fees.

Deposit insurance in Hong Kong is limited to 500,000 HKD (approximately US$63,690 as I write this), plus there's likely to be the same problem as in Singapore with an "alien" currency: higher bank fees.

It could well be better than the United Kingdom or Australia for U.S. dollar deposits, but the U.S. is very accessible.

As an aside, if you're able to get a Schwab brokerage account in the U.S., then you should also be able to get Schwab's superb, low cost ATM/debit card.

 

[boroangel]

BBCWatcher,

I just called up the Charles Schwab Singapore office and there is a slight complication. If you are Singaporean but residing overseas, it seems we have to be very specific with residence. In this case one is not allowed to open the account in Singapore but it will be a US based account it seems.

I just like to understand for both IB and Charles Schwab, if I am residing overseas,

1. What will be the tax implications of holding T - bills?

2. I cannot send a USD cheque from a Singapore bank to Charles Schwab Singapore as my account will not be set up with the Singapore office. In this case, I think the main advantage is that there is no commission with buying T-bills with Charles Schwab. However, they don't do CDs.

3. I took at look at IB website and am trying to find how much their commissions are with regards to T-bills?

https://www.interactivebrokers.com/en/index.php?f=1590&p=options1

Can you please point me to how much commission I have to pay for every 50K placed?

4. If I am placing consistently every quarter, or yearly T-bills, I guess it might be better to do it with Charles Schwab which has no commission involved?

 

[BBCWatcher]

In this case one is not allowed to open the account in Singapore but it will be a US based account it seems.

That's awesome, actually. The minimum to open is lower, and you should be eligible to get Schwab's lovely ATM/debit card.

If your U.S. dollars are at Citibank Singapore then you might be able to transfer them fee free using Citibank Global Transfer to Schwab's custodial account at Citibank in New York.

1. What will be the tax implications of holding T - bills?

Same answer as below, with the caveat that your country of residence may or may not have its own taxes.

3. I took at look at IB website and am trying to find how much their commissions are with regards to T-bills?

US$10 per US$50K (0.02%, $5 minimum). Schwab wins for T-Bills.

4. If I am placing consistently every quarter, or yearly T-bills, I guess it might be better to do it with Charles Schwab which has no commission involved?

Agreed.

 

[boroangel]

That's awesome, actually. The minimum to open is lower, and you should be eligible to get Schwab's lovely ATM/debit card.

If your U.S. dollars are at Citibank Singapore then you might be able to transfer them fee free using Citibank Global Transfer to Schwab's custodial account at Citibank in New York.


Same answer as below, with the caveat that your country of residence may or may not have its own taxes.


US$10 per US$50K (0.02%, $5 minimum). Schwab wins for T-Bills.


Agreed.

Hi BBCWatcher, can you check your PM if you have a chance. Pretty concerned about the country of residence and how it affects taxes if any.