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This is a guest post by Jennifer Rose. You can read more about her at the end of the post! Write for us.
What is an Expatriate?
An expatriate or expat is a person who lives abroad or outside there country of origin.
American citizens who live abroad are known to face some rather unpleasant financial surprises when they get back to the US.
While spending responsibly when outside the US, their lack of U.S. credit activity often deprives them of new credit cards or loans being issued to them.
Opening a bank account can also be really tough.
American expats tend to be completely unaware of how they should manage their existing credit cards while they live abroad, and there are few identifiable mistakes they usually make.
Here on some of the mistakes expatriates make when using credit cards…
1. Failing to Cancel Accounts Before Leaving the U.S.
If you close a healthy credit card expat account, that will do damage to your credit score and it can take a long time to heal that damage. You might not want to keep individual store credit cards, and they aren’t worth holding on to unless you want to shop online a lot. This regular shopping can help banks make lending decisions in future. Pay attention to the following:
- If you have around 20 store credit cards, you might consider canceling them one at a time.
- If you plan to keep, you must inform the company that you will be living abroad (give them your location).
- Conducting an overseas purchase raises suspicion of identity theft if you have not informed the companies.
- Contact the 3 major U.S. credit bureaus (Equifax, Experian and TransUnion) and inform of your travel.
- Sign up for a service that sends you alerts each time your credit report is requested. This can give you an early warning in case of identity theft. Also avail a free annual credit report from the bureaus to prevent identify fraud.
Don’t close your U.S. bank accounts. Opening a bank account upon returning to the US has become more difficult in recent years. Maintaining your US bank account holds some benefits:
- An online payment from your U.S. bank is the most convenient way to pay your U.S. credit card statements.
- You can also receive part of your income in U.S. dollars.
2. Not Knowing Different International Banking Policies
Never assume that banking processes are the same all over. You may need to make changes, including changing your ATM PIN because of the PIN format. There may also be restrictions when it comes to moving your funds from one account to another at will, especially if you move them between countries. Flight of capital is a concern in many countries.
You must also ensure that you acquire all the necessary information concerning applying for an expat credit card in a foreign country. The rules for a foreign credit card for expats may differ from those you’re used to.
3. Not Maintaining Activity on Your U.S. Accounts
It’s most important to maintain activity on credit cards for expats and bank accounts as well.
You must also watch your U.S. bank accounts closely, too. If you happen to bounce a check unintentionally you’re out of the country, your name could wind up on Chex Systems. This can make it harder for you to open a new account.
4. Not Holding On to Your U.S. Home Address
You must retain your address in the United States. If you don’t, maintaining your U.S. bank account will not be possible, and re-establishing credit when you get back to the US will be tedious. The following tips will help:
- Maintain a mailing service that offers a U.S. address along with online access to scanned copies of your mail.
- Using a P.O. Box won’t do, as banks are curtailing this usage.
- Alternatively, you can have a trusted friend or relative receive your mail within the US.
It’s quite common for expatriates to hand power of attorney to a trusted person, especially when expatriates reside at locations where they don’t have access to phone or Internet services. This arrangement will help you handle your finances in a timely manner and avert late fee issues.
5. Failing to Fix Your Credit When Returning to the U.S.
Never assume that you have lost everything just because you have made all of the credit card mistakes mentioned above. If you have been living in a country that has some form of credible credit system that shares similarities to the system in the United States, you may make a request for a report on your credit performance. This can help you in the US.
If you can’t manage this:
- You might still be able to prove your creditworthiness by producing documents of property you owned and any mortgage payments you made while outside the US.
- You can also offer proof of the rent and utility bill payments.
If you maintained a healthy relationship with the bank or lender that you dealt with overseas, you may ask them to deliver some proof in writing, or email confirmation of how pleased they’d be to have you as a customer again. If you can provide any type of reference that offers proof of your paid bills with a keenness to pay debt, this will help you re-establish your credibility.
About the Author:
Jennifer Rose is pretty well known in some of my community circles. She once saved an entire family from a sinking. When not impressing people with her humbling humility, she can be found as a freelance writer, digital marketer and finding shiny objects on the internet. She enjoys the company of much-appreciated friends and living out her nomadic nature.