By Luigi Wewege, the Senior Vice President, and Head of Private Banking, Caye International Bank in Belize.

The decision to open offshore bank accounts is a sound one. Those accounts can help you generate additional wealth and ensure a more secure financial future in many instances. The goal is to determine what type of offshore accounts would potentially provide the kind of support that you’re seeking.

Here are the more common types of offshore bank accounts available, emphasizing accounts designed for personal use.

Checking Accounts

Checking accounts are one of the most common offerings for offshore banks. Available to individuals as well as commercial accounts, these provide the opportunity to have funds on hand for general expenses. You may use electronic or paper checks to issue payments, or you may use a debit card associated with the account.

Some offshore banks provide interest on the balances found in their checking accounts. Typically, there is a minimum balance that you must maintain throughout the current period to receive the interest. The bank may also offer free checking services as long as the balance remains above a certain amount.

Basic Savings Accounts

An international basic savings account works much like what you are used to at home. It’s possible to open this type of account with whatever minimum balance is required, then add to that balance when possible. Additions can be made using manual transfers from your international or domestic bank account in most cases.

As with a domestic savings account, your international counterpart will provide interest on the balance once it reaches a certain level and remains there. It’s not unusual for international banks to assess a penalty or fee if you do withdraw funds from the account at some point. Consider the basic account as an excellent way to earn interest on the money you don’t plan to use anytime soon.

Demand Deposit Accounts

International demand deposits are a form of savings account. They function in much the same way since you need to establish a minimum balance to earn interest. There is one way that a demand deposit account is different from any other savings account; that has to do with what happens if you withdraw funds suddenly.

Unlike other types of savings accounts, you do not incur a penalty or fee for the withdrawal at most international banks. Of course, you no longer earn interest on the previous account balance; any interest you accrue will be based on the current balance. You could see this as a way to set aside funds that you don’t expect to use in cases other than emergencies.

Term Deposit Accounts

As one more example of an international savings account, term deposit accounts require that you deposit funds and agree to leave them within those accounts for a specified period or term. In exchange for doing so, you are often offered an interest rate greater than the interest provided on basic savings or a demand deposit account.

Those thinking of building a nest egg for the future would do well to consider opening a term deposit account. It’s not just because of the higher rate of interest earned; many institutions will allow you to roll the account into another term when the current one expires. That will enable you to continue building additional resources without having to transfer funds from other accounts.

Keep in mind that when the term expires, you also have the option of adding more to the balance and signing up for another term. That would increase the balance used to calculate the interest payments when the next term ends.

International Lines of Credit

While many assume that international lines of credit are only offered to business owners, the fact is that high-end individual depositors can also make use of this type of financial account. Like most domestic lines of credit, it’s possible to have a standing credit line that you can use at will, up to a certain amount.

Just as you would do with a loan, you would repay the balance over time. There’s generally a minimum amount to pay each month to avoid incurring more interest on the outstanding balance. Still, you are free to make payments of any amount above that minimum.

Why go with a line of credit rather than apply for a loan? The interest rate is often competitive and, in some cases, may even be lower with the credit line. In addition, you don’t have to apply every time you want to use the line of credit. Make the transaction that you want and then set out to repay the amount you used.

You’ll find that many international banks do not impose a recurring fee to keep the line of credit open. The only expense you have is the interest that must be paid on whatever outstanding amount currently exists.

Real Estate Accounts

Do you like the idea of owning real estate that you can lease? Maybe you want a vacation home or possibly plan on living the expat life after you retire. Property at an offshore location could be ideal for you.

Keep in mind that you don’t have to take out a mortgage from your domestic banker or mortgage your domestic properties to get the money for the offshore purchase. You’ll find that many international banks are happy to work with clients who want to purchase real estate in the countries where they operate.

Keep in mind that some nations welcome property ownership by non-citizens without reservation. Others may limit the types of properties you could buy or require that a citizen serves as your agent until you establish residency. You’ll find that personnel at international banks that offer real estate financing can help you understand the laws that apply in your case.

International Investment Accounts

There are investment opportunities worldwide that may or may not be available to you through a domestic investment account. Since some of them may be in line with the level of volatility you’re willing to take on and offer the potential for reasonable returns, it makes sense to set up an international investment account with an offshore bank. Many of these banks either have investment arms or money management specialists to help you evaluate firms that can provide you with this type of account.

At all times, the investments held within this account portfolio remain separate from any domestic ones. That means they may or may not be subject to the same rate of taxation or transaction fees as the ones you have at home. As one more way to grow wealth for your later years, it’s worth looking into offshore investing and see what interests you.

International Trust Fund Accounts

As is true with domestic trust funds, you can choose to place assets into an international trust and have them held for the future. This is often a great way to control the taxes that are due on any growth generated by those assets. It’s also a wonderful way to provide for loved ones in addition to the provisions made in a will or that you choose to leave to an insurance policy beneficiary.

Like their domestic counterparts, international trust funds can be revocable or non-revocable. A financial professional can help you evaluate the pros and cons of each choice, based on who will be the beneficiary and your reasons for establishing the trust in the first place.

Get Offshore Account Guidance from Experts

Making sure you understand how different offshore accounts function is key to deciding which of them will fit in with your personal financial goals. You can depend on the team at Caye International Bank to aid in evaluating your needs in light of those goals.

Together, it’s possible to identify the accounts that will serve you now and in the years to come.

Contact the financial professionals at Caye today for more information on different offshore bank accounts and how you can benefit from them.

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