Posted by: patenttranslator | March 16, 2019

Use Occam’s Razor to Access Your Money When You Travel Abroad or Live in Another Country

One of the problems that I had to solve before and after I moved from United States where I had been living since 1981 until the Fall of 2018, with the exception of a year that I spent living and working in Japan in mid eighties, was how to make sure that I would have easy and safe access to my savings in US banks and to my US Social Security income after I move to Czech Republic.

There were of course also many other problems that I had to deal with, such as deciding to which city I was going to move, how to find an apartment and how to rent it over the internet, and little details like that. One thing that all of these problems have in common is that they can be solved only if you have some money and if you can access your funds without paying an arm and a leg for this access.

You will generally have to pay an arm and a leg, and abdomen too, if you accept the advice of your friendly bank employee in any country because the bank will try to capitalize on the fact that you are going to need it more than you used to.

Any bank in any country will of course try to screw you as much as possible. I don’t think this is even debatable.

So the first thing I did was that I visited Czech Republic about six months prior to my planned departure from United States to open a Czech checking account there with several thousand dollars that I brought with me in cash, or as much money as I thought I would need for the first few months or so for my life in another country. The Czech bank gave me a lousy conversion rate, but I was happy that I was able to open a Czech account, even though I did that with an American passport.

Having done that, I then returned to United State because I still had a few details to iron out there, such as talking my wife into signing the divorce papers.

That actually went pretty well. After I agreed to give her most of the money to be received from the equity in our house, she was suddenly quite eager to file and sign the divorce papers. I’ve been paying the mortgage, taxes, insurance, home owners association payments, utilities and all the other good stuff that comes with having a house (I’m sure I’m still forgetting something here) for twenty five years all by myself.

But in the end, she got most of the money as a part of the divorce decision, although she herself never paid a dime for the house, since as a “homemaker” she had no income. Who needs an income when you have a husband, right?

But, hey, after 34 years of servitude, it’s in my opinion a small price to pay for freedom! To quote Martin Luther King, ‘Free at last, free at last, thank God almighty, I am free at last!’

Incidentally, I will never forget the day at the Norfolk Courthouse when we finally did it and got divorced.

While we were waiting for about two hours in the hallway in front of the court rooms along with about a dozen people who were anxiously awaiting the same thing, the atmosphere in front of the courtroom was dense and depressing and several women were crying.

The people still looked kind of scared and lost in gloomy thoughts inside the elevator when we were going down to the street after we got our divorce papers. But then one freshly divorced black lady suddenly started cracking funny jokes and all of us inside the elevator erupted in laughter that lasted until we finally escaped from the depressing courthouse atmosphere into the sunlight of the free world again.

But let’s get back to the main issue of my blog post today. I tried to figure out different ways to access the money in my US checking account by moving it regularly to a checking account in Czech Republic, but I soon realized that all of the possible approaches were in the long run quite expensive.

Because both banks may charge you quite a bit for each transaction, internet banking, which means sending money from one of your checking accounts in one country through your smart phone or computer to another checking account in another country, makes sense only if you do it only once a while and for relatively large amounts. I could also use PayPal for the same purpose, but PayPal is again quite expensive.

The US Social Security administration will send your monthly pension payments to you free of charge just about anywhere in the world, with the exception of some countries such as North Korea or Cuba, either in dollars or in the currency of the country where you live, depending on what you prefer. But if you select dollars, the bank in the receiving country will charge you a certain percentage depending on the bank, at least 1 percent of the amount being sent, for the privilege of receiving the money to your account. If you do it every month for as long as you live, it will be a lot of dollars that you will shell out to the bank in your new country … for having your money sent automatically to the bank, which is to say for nothing.

If you select to have the money sent to you in the currency of the country where you live, the bank will try to screw you big time on the exchange rate. For example, the exchange rate published on internet by Reuters today is about 22.6 Czech crowns per 1 US dollar. But if you have your pension payments sent to your bank Czech Republic, the bank will convert dollars to crowns at about 20 crowns per dollars, or even less, depending on the bank.

I assume banks in other countries play the same tricks with conversion rates in other countries as well.

A really clever currency conversion trick the banks play, at least the banks in Czech Republic do, goes like this. When you use a foreign ATM card here, you will get a message in English and in Czech asking you whether you want to use the bank’s conversion rate, or whether you want to refuse the conversion rate offered by the bank. The Czech bank’s conversion rate will be displayed and it will again be significantly lower than the median rate shown on internet sites, for example instead of 22.6 crowns, it will be about 20 crowns to a dollar, while the other rate that you can also select will not be shown.

Most people, especially tourists, will select 20 crowns to minimize the risk that they will end up getting a lower rate than 20 crowns to a dollar, even if they know that it is a pretty lousy rate. I too have done it several times, thinking that I will minimize the risk in this manner. What if the unknown rate is even lousier? But when I selected the unknown rate, I discovered that this unknown, secret rate is actually much better, namely almost as high as the median exchange rate that is displayed on the sites on the internet.

Now, my bank in US or another country is charging me a dollar as a fee for using a non-network ATM, as it would if I was using a non-network ATM in United States, and the bank in another country will also add a small fee for the same reason, on top of the withdrawal amount. But these fees are relatively small. For example, if I withdraw 5,000 crowns, the highest amount that I can get here from an ATM, I would receive 5,000 crowns for withdrawing 222 dollars from my account in America, and I would be charged $1.50 by the two banks for using a non-network ATM.

If all you need is some walk-around money, this is by far the cheapest way to get some cash by accessing your money in a foreign bank, and you can do it at the same relatively low cost probably through any ATM, especially if you select the highest amount available.

If you need more than that, for example for a major purchase such as when you need to buy new furniture, you can again use your US ATM card in just about any store abroad.

US bank cards are generally rejected by Czech stores when you try to use them through internet abroad, at least I have not been able to do it here. But the cards will work if I use them in person in a store or in a restaurant. I guess it is much less risky for the banks if the card is used in person, when compared to the risk of a card being used in a foreign country through internet.

So this is how I do it now to minimize the cost of having access to my own money deposited in another country … and it took me only about five months to figure it out.

Occam’s razor, the principle defined in the 14th century by the medieval philosopher William of Ockham, which states that when several solutions are possible, the simplest solution among them is usually the best one, holds true also in the 21st century when it comes to accessing your own money through banks when you travel or live abroad.

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Responses

  1. What banks abroad will do when you are abroad and you want to get your money in your home currency, is this, Steve, (and it appears to be the same procedure everywhere): they convert the money from your home currency to their local currency (charging you the conversion fee) and then convert it back to your home currency (charging you an additional conversion fee).

    I have found that the cheapest way would be to pay as much as possible by ATM card and avoid drawing cash. Since now even small amounts can be paid by card (dealers e.g. in Germany would previously not accept card payments for amounts of less than EUR 10, but this has fortunately passed), I carry little to no cash when in CZ, D, A etc., just enough for parking fees or other sundries.

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  2. Good advice.

    But sometime when I pay with my card, for some reason it looks like the payment did not go through. When I then check it on my phone, I get the message “Processing”, which can stay there displayed for several days, although the payment did go through and the message will eventually disappear. Maybe it’s because I am using American cards and you are using a card from an EU country.

    I still use my ATM debit card for payment as much as possible, I just used it for 118.60 Kc at Albert, but I also need to have some cash on me in case the card will do its trick on me again. Last week when I used a card with Plnataska.cz to stock up on food and booze, I paid them twice because of that (but they gave me the money back, of course).

    I think that when I refuse to accept the bank’s extortionery exchange rate at an ATM, it’s as cheap to get cash from the bank as when I am using a card for payment.

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  3. This won’t help with card issues, but go to blog.oppedahl.com to see cheap ways to wire transfer money to foreign destinations (patent attorneys are always wiring money to foreign countries to pay their local associates, so wire transfer costs are important). This may enable you, e.g., to receive money in the US in dollars and wire transfer it to CZ at a much lower cost.
    For cards, if I recall correctly, First Republic Bank does not charge foreign transaction fees (neither does my wife’s credit union card, but that’s a local credit union and not likely to be helpful to someone outside northern California). And I completely agree that you should never take the ATM’s offer of conversion into dollars – let your home bank do that.

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  4. Thank you.

    I will check it out

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  5. I have heard that if you have an account with Scwab, they refund your overseas ATM fees. You might also want to look into services like Transferwise which allow you to move money overseas more cheaply than conventional banks.
    https://craft.co/transferwise/competitors

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  6. Hi, I’d recommend you TransferWise. I’ve used it in the past to transfer money from the US to Europe and it is extremely convenient, certainly much less than any bank and also less than PayPal. You should definitely give it a try:
    transferwise.com/u/marcor591

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  7. It looks like cashless is the future. I was listening on youtube to the cashless world in Sweden. People are happy to have implemented microchips into their hand to pay the gym or travelling fee. It’s like a vicious circle.

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  8. It’s much easier to have totalitarian control over people who don’t use cash. You not only know what they are thinking about from Google searches and social media, but you also know exactly how much money they have and what are they spending it on.

    And in the unlikely case that they get out of line, you simply temporarily or permanently deactivate their cards.

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  9. I think TransferWise is a good solution, too. Worked well for us. Interesting post.

    Like


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