Expats: Close Your Bank Account When Leaving the US

There’s a lot to think about when planning your move abroad, from visas and housing to healthcare. 

But one key aspect often gets overlooked: your bank account in the United States. 

For many expats, leaving a US-based bank account open makes sense, especially if you aren’t sure how long you’ll be gone. 

You can use it to make online payments back ‘home’, and depending on what kind of account you have, closing it might seem like more hassle than it’s worth.

However, leaving your US bank account open as an expat living abroad can lead to unexpected headaches and costly complications down the line.

US banks are notoriously restrictive when it comes to anything ‘offshore’. 

Many account holders who attempt to wire money overseas face blocks, delays or even account closures. 

This hassle stems from the fact that the US banking system is designed with a domestic focus, making financial management much harder for expats. 

Just imagine the headache of needing to pay bills or access funds, only to find your account locked for ‘security’ reasons. 

Unfortunately, this is a reality for many Americans living abroad who keep their US bank accounts open.

And while it might not seem like it now, in the midst of all the other steps you’re taking to go offshore, it’s a pretty big issue. 

The ability to manage your money globally without interference is essential for a stress-free expat life.

Do You Have to Close Your US Bank Account When Leaving the Country?

The short answer is no, you’re not legally required to close your US bank account when moving abroad. 

Many expats continue to use their US-based accounts for convenience, especially if they have ongoing financial obligations in the US.

However, keeping these accounts open as an expat actively living abroad can sometimes lead to complications. We’ve seen it time and time again over the years – US banks often struggle to provide effective service to clients living overseas. 

For example, some banks may block wire transfers originating from your account or freeze access altogether for ‘security’ reasons. 

At Nomad Capitalist, we’ve seen this happen before with a client who faced significant challenges simply trying to send US$20,000 from her US bank account to her offshore account. 

Despite the money being sent to an account in her own name, her bank restricted the transfer and eventually locked her out entirely. 

She couldn’t access her funds, pay bills or even log in to online banking – all because she was an expat living in Asia with no US address.

US-based banks may also request updated residency information, and failure to provide this could result in account restrictions.

So no, while you don’t have to close your US accounts, we do suggest evaluating whether your bank will meet your needs abroad. 

If not, closing the account and transitioning to a more globally friendly financial institution might save you headaches in the long run.

Pros and Cons of Keeping Your US Bank Account While Living Abroad

Keeping your US bank account active as an expat has its perks, but it’s not always smooth sailing. 

A major advantage is staying connected to the US financial system. Having an account simplifies US-based transactions, like paying bills, receiving Social Security payments or managing investments. 

It also provides access to US credit cards, which often have better rewards and lower fees than foreign banks.

On the flip side, expats often report challenges maintaining these accounts. 

Many banks have strict compliance rules and regulations like the Patriot Act. As evidenced in our examples above, if they detect a foreign address or suspect you’re an expat, accounts can be frozen or even shut down without notice. 

Updating your address to a foreign one can trigger these issues. Some expats conceal their overseas status using a US virtual mailbox, though this isn’t foolproof or without risk.

Foreign transactions with US banks can also be problematic. 

They may reject wire transfers, require a US phone number for verification or impose hefty fees you wouldn’t otherwise incur if using a local bank account in your new country of residence. 

Ultimately, the decision boils down to your specific needs both now and in the future.

If your US account is important to your financial planning, explore options like expat-friendly banks or credit unions that cater to foreign residents and can maintain your account without complications. If it’s not (and it likely isn’t), look into opening an account at one of the best offshore banks for US citizens.

US Big Bank Bureaucracy and Offshore Planning

If everything we’ve mentioned already sounds like the act of some unaccountable bureaucrat, it essentially is. 

Think about our example above: a bank customer tried to send a wire transfer from her bank’s online dashboard. She had to log in to access online banking and then receive a verification phone call to add a new wire recipient.

All it took in her case was some worker at a call centre to say that she was ‘uncooperative’ with answering security questions from a blocked phone number, and boom – her account was frozen.

Just to reiterate how important it is to think about this kind of bureaucracy as you build an Action Plan, we have another example of how difficult managing US bank accounts as an expat abroad can be.

This one comes from Nomad Capitalist founder Andrew Henderson, who used far more difficult methods to get his money out of the US and to other accounts.

Fortunately, he was able to pay his credit cards via wire transfer from a foreign bank. He had (and continues to have) a ‘no US’ policy in that he won’t visit or even transit through the United States, so if a bank demanded he return to the US  to ‘verify his identity’, he’d graciously refuse.

After all, it’s not the 1940s anymore.

Part of our five magic words at Nomad Capitalist, ‘go where you’re treated best’, revolve around finding the countries and banks that not only offer stable institutions and sound policymaking but also ease.

Maintaining a simple checking account shouldn’t require you to verify 19 pieces of data, answer how tall your driving license says you are and buy a fax machine to send in some forms.

Yet, that’s exactly how US banks (and, sadly, some Canadian ones, too) operate these days. 

They don’t care about making it easy, and they don’t care if you travel or live overseas. To them, the idea of living outside of the so-called ‘promised land’ is something no one would do.

While banks in Hong Kong, for instance, realise plenty of foreigners go there to park their money, the United States is the world’s largest tax haven for foreigners, and they still don’t get it.

Therefore, if you’re a US citizen or resident who is living overseas and has accounts back home, we have a simple suggestion. 

Close them.

How to Close Your US Bank Accounts as an Expat

Ready to close your US bank account and move abroad? In most cases, it’s easier than you think. While it might change from one bank to another, here are the general steps:

• Contact Your Bank Early: Notify your bank about your plans to move and close your account. Banks often require advance notice and may have specific procedures, so starting early is key to avoiding delays or, in most cases, headaches.

• Settle Pending Transactions: Check for and complete any outstanding transactions, including unprocessed checks or fees. Leaving unresolved items could complicate the closure process.
  
• Update Automatic Payments and Deposits: If possible, redirect automatic payments, such as subscriptions or utilities, to a new account. Similarly, it’s worth checking with your new offshore bank to see if it’s possible to pay subscriptions and utilities from your new account.

• Transfer Funds: Move any remaining money to another account, whether at an overseas bank or a global bank with expat-friendly policies. Ensure the transfer is successful before closing.
  
• Close Linked Accounts: If the bank account is tied to other accounts, such as credit cards, coordinate their closure if necessary to avoid fees or confusion.
  
• Request Closure in Writing: Formally ask the bank to close your account. Obtain written confirmation or a closure letter as proof, which you might need for handling any future disputes.

One final word of advice: don’t wait until the last minute to do this. 

When you’re moving abroad, you will have plenty of other last-minute emergencies to handle, and this shouldn’t be one of them.

Expats: Close Your Bank Accounts When Leaving the US – FAQs

Offshore Banking as a US Expat

Just as you should never close certain accounts in Hong Kong for fear that you might never get another one open, use the knowledge that US banks are getting more provincial by the day to close up shop and move to greener pastures.

Otherwise, you might have a really hard time moving your money out later. 

You can open all the offshore bank accounts you want, but if the money you want to put in those accounts is stuck somewhere else, they won’t do you much good.

The only reason to keep a US bank account is to pay US expenses like rent or a mortgage. But if you’re living overseas, why do you need a bank account to pay rent or mortgage?

Take any company’s refusal to deal with customers who don’t have US bank accounts the same way you would a potential relationship partner on the rebound.

And lastly, if you’d like to have our specialists at Nomad Capitalist help you with setting up your offshore affairs, we are here to help. 

We’ve helped thousands of high-net-worth individuals go offshore and build a life that allows them to maximise their wealth, protect their assets and diversify their lifestyle. 

Interested in becoming another one of our Nomad Capitalists? All the details are here.