Bank accounts, currency exchange, and financial advice for an American in Hong Kong?

May 29, 2008 3:05 AM

Moving to Hong Kong for two years, and seeking advice on keeping the finances in order.

I've been hired by a company in Hong Kong and will be there for a minimum of two years. I will be paid exclusively in Hong Kong Dollars. However, I have some small recurring bills and such that will need to be paid in USD.

This seems like a pretty typical temporary-expat situation, and I wonder how other people have approached it. In essence, I'm looking for advice on and experience with HK banks and credit cards, and transferring money from HKD to USD at regular intervals without getting screwed on the exchange. Any and all experience with expat finances in HK is appreciated.

Status: US citizen of the Brooklyn type, no debt except rapidly diminishing student loans, one US brick-and-mortar bank checking account, one ING Electric Orange checking account, couple of investment accounts through Vanguard, couple of US credit cards that rook me for 3% when I use them abroad.

posted by milquetoast to work & money (4 comments total)

I'm American and have been living in Europe for about eleven years. I came here under pretty much similar circumstances to yours - work, short term contract. I can't help you on the Honk Kong specifics, but can advise of a few generalities that impact all ex-pats.

The thing that's gonna cause some uncertainty will be exchange rates. The best case would be to get some of your pay in US Dollars, so your Dollar obligations are covered.

If this isn't possible, I'd suggest that you set aside enough cash on the US side now to cover one year or so of your State side obligations. At least that way you won't have to worry about the rate of exchange (although it does look like the US Dollar will continue to decline over the next few years).

You'll still have to file US taxes while living in Hong Kong. The first $95K (or so, not sure about the exact cut off) earned abroad will be tax free on the US side. You'll still be taxed in Hong Kong on those wages, but you'll get foreign tax credits on the US side.

You can also deduct much of the costs necessary to maintain a foreign residence for the purposes of employment.

If you're receiving housing or annual trips home as part of your ex-pat contract (I did for the first four years), these will be taxable on the US side as well.

Be careful about direct investing in Hong Kong. Foreign investments really complicate your tax returns. especially so as sometimes vehicles that are legal in other domiciles don't have US counterparts and can cause the good folks at the IRS some confusion (which may lead to cost on your side).

Bottom line on taxes: you'll more than likely have to engage a professional to help you prepare your returns (at least for the US side) - I work in banking, and I certainly do.

A little OT but germane to the ex-pat experience - I'd suggest you check out how to get permanent residence while you're there. Your employer probably won't help (that way you remain on the short leash, the work permit), but I found that after four years of working in England I could obtain Indefinite Leave to Remain (Green Card equivalent) without my employers knowledge or sponsorship. That way you're in control, not your employer.

I had friends at the bank I was working for who didn't apply for Indefinite Leave, and once there was a downturn in the markets it was job over, work permit canceled, they had to return to New York with two weeks notice. Not a good position to be in if you've been living in a country for years.
posted by Mutant at 4:33 AM on May 29, 2008

If you qualify, I highly recommend HSBC Premier Account. You can have linked accounts in HK and the US and move money over as needed. You can also get a Premier Credit Card that has no transaction fees associated with currency conversion. Customer service is fantastic as well.

Otherwise, you can keep a US account and transfer money to it, but you can't wire directly to ING (at least I couldn't in the past), so you'll need your US bank to be a destination for wires. With that setup, you can pay US bills electronically from your ING account and feed it through your US brick and mortar account.
posted by qwip at 6:15 AM on May 29, 2008

I suggest a Capital One credit card, which does not charge foreign transaction fees.
posted by subtle-t at 7:39 AM on May 29, 2008

I'm an American living in Hong Kong. The banking situation is not too complicated here. I opened a PowerVantage account from HSBC, which allows money to be kept in various currencies in the same account. You'll only get very minorly screwed in converting between currencies, and can keep your money in whatever currency you like. (For example, today's rate is 7.7925 to buy US dollars and 7.818 to sell US dollars – a difference of 0.33% if I did the math right). You can also painlessly transfer cash to your US account, but you'll be hit with about $30 in bank charges per transfer. I believe transfer charges are waived if you have a Premier account and transfer to an HSBC account in another country, but the Premier account has much higher monthly charge or requires a much higher balance to waive the fee.

You'll also want to get a local credit card, which is easy if you have an account in the same bank. (Usually the banks offer promotions to waive credit card fees also if you have an account.) This way you don't need to worry about foreign transaction fees, and can pay the credit card locally without converting and moving money around.

Make sure to leave some money in your US account before you leave so you can pay those recurring bills and other small expenses that come up without having to transfer money often.

Note that it can be quite complicated to open an account here. You'll need to show proof of employment, a housing contract, etc., and may require several trips to the bank before you have all the paperwork they require.

Other banks in Hong Kong have similar types of accounts, so you should check the web sites of various banks to see which have the best deals.
posted by Etaoin Shrdlu at 8:07 AM on May 29, 2008