You’ve always heard that offshore bank accounts are only for the rich. That’s not the case. Many offshore banks welcome business from depositors who are in the middle-income bracket.
Upon further investigation, you may find that opening and continuing to deposit funds into an offshore checking account would be helpful in more ways than one. Here are six examples of how you can use that international bank account.
1. Earn More Interest on Account Balances
The concept of earning interest on a checking account balance is nothing new. You may earn a little interest on your current domestic account balance by ensuring that it never drops below a certain level. You may not know that many offshore checking accounts also offer this perk, sometimes with lower minimum balances than you would have to maintain at home.
You may also be unaware that interest rates for offshore checking and other bank accounts tend to be higher than your home bank offers. Depending on the amount you deposit and keep in that offshore account, the rate may be double what you can receive domestically. That’s certainly an incentive to consider opening an offshore account.
2. Keep Your Tax Obligation Lower
Any plans for opening offshore accounts must involve understanding the laws and policies that apply in the nation where those accounts will reside. A significant benefit often found in better offshore locations is that you will owe little to no taxes on any interest income your checking balance generates. The fact that you keep more of your money in the account is yet another incentive.
Remember that you will likely still need to report the offshore checking account activity to your domestic tax agencies. However, the usual case is that the income is reported but not taxed as long as it remains offshore. See this as a way to build a financial reserve while lowering your tax obligation.
3. Shield Assets from Domestic Legal Troubles
Panama based attorney, Idaliz H. Guiraud said: “that while you have no intention of being involved in a lawsuit, unexpected events can arise. Should you be sued and the judgment favors the plaintiff, the court may order the sale of your domestic assets to settle the obligation. Depending on the amount involved, it could wipe out all of your domestic bank balances.”
Be aware that domestic courts have limited ability to order the seizure of the money in your offshore checking account. If the worst-case scenario does come to pass, you will still have those funds to keep you afloat. While you never hope it becomes necessary, knowing the money will be there if you need it is comforting.
4. Pay for Investments Through Offshore Bank Accounts
Your plans should include more than opening an offshore bank account. Wouldn’t it be nice to secure some assets too? Perhaps you would like to buy real estate. Have you thought about how you will go about paying for such an asset? Consider keeping all the transactions offshore using an international checking account to cover those fees.
Use the offshore bank account to receive the funds from your offshore real estate loan. It can then be used to remit payment for that property. Make the mortgage payments using the offshore account too. Keeping it all separate from your domestic activity makes it much easier to track progress and simplifies the accounting.
Your offshore checking account balance can also be used to fund an international investment account. When needed, transfer funds for new investments. As those acquisitions begin to generate returns, you can always transfer a portion of them back to the checking account. Use the remainder for future investments.
5. Fund International Travel
Traveling abroad is always fun. One way to make the trip even better is to consider using your offshore checking account and debit card for all the expenses. This allows you to make the best possible use of the current exchange rate between different currencies. You not only get to have fun, but you do so in a way that makes it possible to do more with less.
For example, you want to buy something while on your vacation. The conversion between the local currency and your domestic currency may not be all that favorable. There may also be fees to pay that would not apply otherwise. You can use the balance in your offshore checking account to enjoy a better exchange rate. Depending on the currencies involved, you may find there are fewer fees to pay.
6. Build Wealth For the Future
No rule says you have to do anything with your offshore checking account balance. It’s possible to establish the account, reach the minimum necessary to earn interest, then add to the balance when possible. Since you never touch the money, that balance continues to grow as the years pass. It could be significant by the time you’re ready for retirement.
In the meantime, you have the peace of mind that comes with knowing you have backup resources if something catastrophic happens. Many offshore banks offer secure online access. You can quickly check balances, see how much interest was earned during the most recently closed period, and more. Be happy knowing the money is safe and often protected in ways that are not possible with domestic banks.
Offshore Banking is Within Your Reach
These are only a few benefits of having an offshore checking account. There are many different types of offshore bank accounts, each offering unique features and benefits.
Now that you know offshore banking is within your reach, you can investigate other offshore investment options delivering opportunities for financial growth. Banking and investing offshore can be the best financial decisions you’ve ever made.
Luigi Wewege is the President of Caye International Bank, headquartered in Belize, Central America. Outside of the bank, he serves as an Instructor at the FinTech School in California, which provides online training courses on the latest technological and innovation developments within the Financial Services industry. Luigi is also the published author of The Digital Banking Revolution, now in its third edition.