Open US Bank Account From Abroad

Open US Bank Account

Open US Bank Account

  • Have you ever wondered how to open bank account in the US?
    • The answer – it’s dead simple. Just walk into any bank, present your passport, address, mobile phone – DONE. You get your VISA/MasterCard a week later.

That’s it. Article is over.

  • What about if you are a foreigner?
    • The same applies here too. As long as you have a Green Card – you are sorted.
  • But what about if you are abroad?
    • This one is a bit more tricky

Since I need US Bank Account myself, I have spent quite some time investigating this and I wanted to share what I found out with you. If you Googled for such a quote – how to open US Bank Account from abroad – you would get quite a few results back. Some are rumors, some are truth – others are a sheer luck. Let’s talk about some of them. The information I tell you here is true as of August 2016. Time goes by – rules and law change.

UK – US Banks

At first I thought about looking at the banks here in the UK which have branches in the US. It should be pretty simple to open an account here and then transfer it to the US. Unlucky me – it is never that simple. Yes, they do open bank accounts in USD currency, but they do that in the UK and you can’t transfer them. It would have been alright to me, cuz I needed an account with USDs only and it didn’t really matter where it was residing. But where was the catch?

The catch was that this account would not have a credit card, which basically meant I would not be able to spend those hard earned dollars unless I exchanged them into GBP. But the idea to open the account was so I wouldn’t have to do this. No point of having USD account, which is only there to keep the money in, but no way of spending it. Another thing is that you are required to put a huge chunk of money in it, in order to open it. Yet another thing is – it costs a lot to pay for the account maintenance – from £30 to £100 a month. It’s scrapped away if your account balance is enormous, something like £50-100k. You might also get a credit card this way. But having such amount of money at hand you would rather go to the US yourself and open it there without all of this nonsense.

Virtual US Bank Account

Market

The virtual US Bank Accounts are US Bank Accounts, which are actually in the US. The idea behind this is that the company has their US Bank Account and they sell you the space. It’s not that simple behind the scenes, but you get the idea. It’s like renting a house. Buy house – rent house. Open US Bank Account – rent US Bank Account.

Payoneer is one of them. It’s globally known company and even Amazon supports it. It does cost, but that’s much cheaper than applying the exchange rate on every transaction. There is also Skrill service with lower fees. However, people complained that they are moved onto the business account when they have higher amount of transactions a month and this is where they pay a lot for them. Don’t forget Payza service. Nonetheless customer service and reviews shot all of them down.

Review

I thought this was my salvation to the problem. My investigation started with reading about them a lot instead. I read the official news and testimonials, but it was not enough. No one blacks themselves putting all sorts of bad stuff on their own website. Nevertheless, just a few swings on Google – Company Name + Review – and you will not imagine what I have found – constant stream of negative reviews and questions about the customer service inexperience.

All customer support answers seemed to be copy pasted to every problem. The more I read, the worse it became. I also went directly to their own forums and even there it was constant negativity and bad customer service. And I thought they would try to hide or delete all the cursing from their forums at least. People kept complaining about losing thousands of dollars. And these complaints were in hundreds. And they were from years ago up until now. I just didn’t want to risk. Odds were way against me. Let me know if you tried any of these services and how it went for you.

Dollars Perception

The rumors are that opening the bank account is easy. But this investigation reminded me the times when I had to open my UK Bank Account. It took me loads of walking and loads of talking. And I was there walking and talking face-to-face. I knew already that to open US Bank Account I will need loads of persistence.

Dollars were always the main world trade currency and banks always wanted us to trade in it. And it is still our main trade currency now. This is not true if you spend all of your money within the borders of your own country, but just leave it for a while – and you will find the truth.

I just recently talked to the factories in China and all of them required me to pay in dollars. I also talked to the car dealers in my country – they also accepted dollars and euros only (main currency of my country is euro). No matter where I was and what I did, one way or another dollars controlled the prices around me. During the night of Brexit vote – everyone talked about the rate between dollars and pounds and how it plummeted. And these were just a few examples of the power of dollar.

The US is the main driving force in money spending, at least till China starts going forward at full speed. Unfortunately, due to the high likelihood of fraud, money laundering and terrorism support through US dollars, banks were directed by superiors to tighten up the rules. We all remember the day – 09/11 – which was a huge tragedy to the US and the whole world altogether. Starting with this day what we thought was easy became a nightmare.

The Experiment

Idea

I wanted to find out how true it was myself, so I did an experiment. I picked up the phone and called the banks in the US. Most of the time I spent in the waiting queue… at least the music was good. I wonder if they have a license for it. After 5 – 10 minutes of waiting each time, someone would answer to my prayers. And in case you were wondering what I used for calls – it was Skype. Cheap and simple. No faff. And the time difference worked out in my favor, because when I got back home from work, people in the US were still working. It was a bit strange calling them just a bit before the bed time though.

On the side note, people working in the US banks were not as polite as British people are. They did remind me my own kind, but with an American accent and in English instead. But I’m used to this.

Snapshot

So most of the calls were along the lines of this:

Me: Hello

Bank: Hello. May I help you?

Me: Yes. I wanted to open a bank account in your bank, if that’s possible

Bank: Yes. Could I get your name?

Me: Arnold

Bank: Hello Arnold. What kind of bank account would you like to open?

Me: The standard one, but I’m calling from abroad and I was thinking if this was possible

Bank: Yes, it is possible, if you are a student and have a US Visa.

Me: No, I’m not a student. But I want to sell in the US and need a bank account to deposit my money

Bank: Unfortunately, we do not provide accounts for such purpose

Me: Is there any way I could open an account then?

Bank: Yes, you have to be a legal student in the US or have a mortgage in the US.

Me: So if I bought a house with a mortgage in the US, would it be enough?

Bank: No, you’d have to take out the mortgage with us

Me: Is there any other way?

Bank: No

Me: Well thank you for your help and information. Have a good day.

Bank: Was there anything else?

Me: No, thanks

Bank: Have a great day. Bye

Me: Bye

Conclusion

To sum everything up, since I was unable to open US Bank Account itself, I was very tempted to try those virtual US Bank Accounts. Seemed like an ideal solution. However, losing money or getting it frozen would not be the best plan of the business. I know the business is a gamble, but this is yet another factor against me. It’s good that I’m in the UK. Amazon accepts UK Bank Accounts. It also transfers all the money there and does the conversion for you. It accepts UK Credit Cards, so I can pay for everything with my cards.

The catch is that Amazon charges loads for it. It takes quite a chunk for FBA already and then it takes a bit for the conversion. And this conversion is for no good reason, cuz I need to spend my money in dollars again. So it goes along the lines of – exchange GBP -> USD, spend those, get back USD, let Amazon convert it back to GBP and pay it back to my bank account. Rinse and repeat. Two exchanges for no good reason for every transaction.

Lost Money

What do I lose, you would ask? Currently as it stands, Google shows £1 is worth $1.29. Since every first time business transaction starts in PayPal (due to the security they provide) they give $1.24 for a £1. It’s $0.05 lost just right there. I know you will never get as good rate as Google shows, but you can get pretty similar ~$1.27. So using PayPal I lose $0.02-0.03 per £1. Doesn’t seem a lot, does it?

Send £10,000 and you lose $200-300. That’s a lot – especially for almost nothing. And sending such a sum is nothing out of ordinary. Let’s say you earn back twice the sum you sent excluding 40% of Amazon’s cut (£20k x (1 – 0.4) = £12k). You have potentially £12,000 x 1.27 = $15,240 sitting and waiting for you in Amazon’s Bank Account. But they won’t give it to you yet. They exchange this sum using their own predefined rate, which is most of the time worse than PayPal’s. They pay $1.20 for £1. So what you would imagine as over $15k landing in your bank account actually ends up being $15,240 / 1.38 = £11,043. If it was the standard rate you would get $15,240 /1.27 = £12,000 instead. That means Amazon takes £12,000 – £11,043 = £957 from your hard earned money – again almost for nothing. It’s £957 less for you, less to invest, less to live on. Nevertheless, you still earn £1,043. And if you are on Amazon’s lucky day and you get PayPal’s exchange rate you are better off by £11,373 – £11,043 = £330.

Trader Buys Sells £ $ Lost Earned
PayPal 1.34 1.24 10,000 12,400 $300 N/A
Amazon 1.38 1.20 11,043 15,240 £957 £1,043

Tips on Saving

The minute you earned enough to cover your journey to the States – be it holiday or business trip – Go! One trip there and with a bit of hassle you will save loads of cash in the future. Conversion rates eat up your profits, which will eventually dip you into the red. But there is a way to save some money, even if you don’t want to open US Bank Account or want to go there.

Exchange currency at CurrencyFair or TransferWise. You will save at least once. Unfortunately, Amazon is too smart and it doesn’t allow you to exchange the hard earned money yourself. And it doesn’t allow you to have US Dollar account anywhere else, but the US. If your account is in the UK and it is USD account – Amazon will still exchange that into GBP and then your bank will exchange that into dollars, which is even worse in the end, cuz you do three conversions instead of two.

Sorry for the long article. I hope this was useful to someone. Every lost battle is an experience. March forward and don’t be afraid to fail.

Arnold

Arnold is a Games Developer in the pursuit of happiness. Once reaching his goals managed to get lost on the blank canvas. Now he experiments on his life in a hope that one day he finds the right path to happiness. He talks about it at www.undergroundhogs.com and @UndergroundHogs.

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