Why Expats Need a Local Bank Account

Closed 24-hour ATMA few days ago I had some errands to run. It was time to pay for cable, internet and cell phone and we needed groceries.

We also needed to replenish our cash reserves at the trusty ATM.

The cab dropped us off next to our preferred bank’s ATM, and my husband whipped out his card and stepped up to the machine. He punched all the buttons, waited and . . . nothing. Nada. Zip. No message on the screen, just back to the usual “welcome” setting.

No Cash for Us at the Local ATM

So he tried again. Same thing happened.

We stepped into the bank and asked the young woman at the desk. She indicated there was a problem with the machine, we thanked her politely and went down the street to another bank and another ATM.

It was a replay of the first episode, only this time the final screen told us ominously that it couldn’t complete our transaction and we needed to contact our bank.

Uh oh.

“Maybe it’s an issue with his debit card,” we thought. So I tried mine. Same thing.

Trying hard not to panic we went on about our errands. I was able to use my debit card to pay for cable and internet, a good sign.

The Problem Wasn’t with our US Bank

When we got home I called our credit union back in the US. (We’re living in a small town in Panama as expats.)

“There’s no problem with your account,” the rep told us cheerfully. “And I can’t see any attempts to withdraw or any declines. Maybe their system just wasn’t communicating with ours. Why don’t you try a different ATM?”

We did, I explained.

“Well,” she said cheerfully, “just try again later.”

That’s all well and good, but it’s hard to stay calm when you don’t know where your next ATM cash withdrawal is coming from. Is it a temporary glitch between Panama’s banks and the US? Will it be fixed right away? Will it drag on for weeks?

Get a Local Account

This is why it’s important to have a local bank account when you’re living abroad. Why don’t we have one yet? Because we goofed.

Before leaving the US, I visited our credit union and got the letter of recommendation I knew we’d need. But what I didn’t know was that we would need a separate one for each of us. Even though our account is joint, we need one letter with my name on it and one letter with my husband’s name on it.

Not every bank in every foreign country has this requirement, but it’s the norm here.

Up until now, the whole ATM thing has been working perfectly, so we weren’t rushing. Now we’ll step it up. Because we only have enough cash on hand for about a week’s worth of expenses. After that, if we can’t access our Stateside funds, we’re up the proverbial creek without a paddle.

This little incident does have a happy ending. We were able to withdraw funds the next day without a problem. Phew!

Set Up Your Local Bank Account Early

As soon as you have an address in your new country, set up a local bank account. Even if you plan to get most of your funds from your “home” account, you should have a local account with enough funds for a couple of months worth of living expenses.

This is one part of your life administration you don’t want to find out the hard way!


  1. Thank you for this article! It was something I had not even thought of. When looking up how to set up a bank account in panama the article said I would need 2 letters of reference from 2 different financial places wrote out to the specific bank i wanted an account set up in. Question…..how do I know what bank I want an account set up in when I’m not there yet and don’t even know where i am going to Live? And I’ve used the same bank for the past 40 years , how can I get a reference from another bank?

  2. Hi Diane,

    I never heard a requirement that your letter be addressed to a specific bank. I’d be curious to know where you saw that.

  3. Do you have to have residency in Panama to open a local bank account? I know in Nicaragua, we are required to have residency before we can open an account. We now have residency, so we have a local account. I don’t keep much money in it and use it mainly to auto-pay my utilities. To tell you the truth, I really don’t feel comfortable keeping large sums or even having direct deposits from our pensions in a Nicaraguan bank. The banks lack confidentiality ( everyone knows how much you have in a local acct. on our tiny island), and our money cannot be insured if the bank closes. The interest rates are higher, though. We have 2 bank accounts with different banks in the states, with 2 ATM cards, and another ATM card from our local bank in Nicaragua. That gives us three ways to access our money with the ability to transfer our money from one bank to another online. We have had to use all 3 ATM cards at one time or another. It’s always a challenge to bank as an expat.

    • I hear what you’re saying about keeping large sums in your local bank. We don’t plan to do that, but we’d like to have a couple months’ worth of bare-bones living expenses here in case of issues with getting the funds from the US. Leaving all your money in the US isn’t a good solution any more, what with FATCA and all its attendant issues. It’s certainly making the financial life of an expat much more difficult. . .

  4. I used to use HSBC everywhere but then they started introducing those crazy little password generators – which are of cheap construction and are NOT waterproof. The batteries also catch fire.

    Now I have split my accounts up so I use ANZ for dealing in Australia/New Zealand; separate HSBC accounts in HongKong, UK and Canada.

    If you think you can transfer money from an HSBC account domiciled in one country to another HSBC domiciled in a different country FORGET IT. They use WIRE TRANSFER!

    They also cream you for exchange rates, etc.

    I try always maintain a cash amount as HSBC likes to do maintenance when you use it on weekends. As for ‘customer service’, it’s non-existent. Try to get some branch phone numbers before you travel and maintain a friendly relationship with a supervisor. A plaintiff voice on an overseas call works, sometimes.

    If an ATM gobbles your card, you often can recover it THE NEXT BUSINESS DAY from the branch where the ATM is located. I never use a standalone ATM.

    Another precaution is to NEVER go for the maximum amount. In VietNam HSBC limits at VND5.000.000 so I always withdraw VND4,900,000. If your account gets rolled over, the crooks will likely go for maximum every time, so keeping to a fixed amount helps prove it wasn’t you!

    I also have my overseas bank statements mailed to that banks branch in your residence country. Almost guarantees they’ll arrive but if they do go missing you can prove it as you have to sign for documents.

  5. FutureExpat says:

    All good suggestions — except for the paper statements. Why not save some trees and just get your statements online?

  6. Mexico Expat says:

    Experience teaches you the hard lessons of life. Living abroad is full of challenges especially financial ones. Here is another good article which recounts the experience of an expat in Mexico (not me!) who went through whole circle. http://www.topmexicorealestate.com/blog/2014/11/banking-for-foreigners-in-the-riviera-maya-my-personal-journey/ The article also compares 2 banks. Worth a read for new or Future Mexican expats.

Speak Your Mind


five × three =


Please type the text above: