How to be an Expat, When You Aren't Technically an Expat (Part 1 – Bank Accounts)

EDITORS NOTE – I give up. Just when I thought nobody would want to read about a layover, now Mark decides to do an entire post on banking? Banking?! In keeping with Hollywood analogies, this isn’t “The Big Short.” And you aren’t Ryan Gosling. Or Brad Pitt. And definitely not Margot Robbie in a bathtub.

An expat, or an expatriate for those who prefer the “Queen’s English,” is a term used to describe an “individual living and/or working in a country other than his or her country of citizenship.” Whether for work, leisure, or a drunken promise to “move to (insert nation) if (insert presidential candidate that rhymes with Frump) is elected,” this collection of lost souls have come together to form a like-minded community in their new home away from home. And have done so by managing to unearth every possible loophole to navigate through the maze of legal requirements that stand before them. Requirements that weren’t necessarily meant to keep expats out, but were more so, established with the notion that expats would never want… in. (Shout out to Sumji, the ONLY registered Mongolian expat living in Iceland. You do you Sumji!) 

Now, as a first-generation American citizen, born to two South African parents, who at the time of my “earthly arrival” were still attempting to pass their citizenship exam, this small technicality in the delay of their citizenship, afforded me the opportunity to obtain my own dual citizenship with South Africa. Which in turn, enabled the passing of this “somewhat useful but not really useful” torch to our boys, Lincoln & Finn. It’s like the familial transmission of DNA, except in this case, the end result does not involve failing to grow to a height greater than that of a rollercoaster’s “you must be this tall to ride” sign. (Damn you Cedar Point and your lack of empathy for the undersized community!)

Thus, arriving to South Africa, as three shorter-than-average-expats-but-not-expats, and one “wife in tow,” we began the time-consuming process of establishing our lives here, piece by piece. Bit by bit. Corrupt system by even more corrupt system. And in doing so, lessons were learned, and what should be a fairly informative blog post series developed unto itself (at least for those who can make it through the 1st few paragraphs -- Julie tapped out pretty early). Also, shout out to Moondust Management for their very educational “how to run a successful blog” session – I actually took a few notes and hopefully paid attention? TBD.

Without further ado, learn, learn away dear readers!

Lesson #1 - Bank Accounts

• System Overview = The system put in place to help people manage their money and charge them extremely efficiently if they are unable to read size 2 ½ font in the bible-length terms & conditions. “I’m sorry, our fees are double if you withdraw from our ATM during a new moon.”

 

• Why do we personally need it? While US-based Visa & Mastercard are accepted at all grocery stores, restaurants & shops (sorry J-Bom, Discover Card shockingly didn’t make the cut), the majority of recurring payments for any form of “service” (e.g. rent, daycare, Miniature Donkey Talk registration) involve a “debit order” that, for the sake of simplicity, must be pulled directly from a South African bank account. Now, you are more than welcome to complicate matters and attempt to wire an overseas transfer from your US account for every basket of clothes dropped off at the laundromat, but those $50 transaction fees do tend to add up over time.

 

• How do I open a South African bank account? All that is required is a South African ID # (similar to a US social security #) and then an address. Literally, any address, which of course is validated via a banker looking at said address, and declaring “Yup, that’s definitely an address.” And that’s it. Not even a source of income is required, which unfortunately does make sense given that the current unemployment rate here is hovering around 44% (sadly not a typo). Even requiring such proof would be as productive as requiring Michael Cera to not play the exact same character in every movie in which he has ever acted. So, pretty much impossible.

 

• How do I actually fund a South African bank account? With almost unlimited options for transferring money from the US to South Africa, all of which involve some sort of financial “loss” in exchange for said service, the most commonly-used options break down as follows (sorted from worst to best):

 

• Cash – You mean money you can actually touch? And doesn’t just exist as a number on a screen? Sounds like witchcraft to me. $10K Transfer “Loss” = $10K (If you are carrying $10,000 in cash in South Africa, you obviously have not read a newspaper in the last 83 years).

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• Western Union – I’m sorry, this isn’t 1873. Please try again. $10K Transfer “Loss” = $600.

 

• Transfer Direct from US Bank to RSA Bank – While the majority of US banks proudly offer a NO FEE foreign currency exchange service, what they tend to avoid discussing is their very “creative” method in determining the actual exchange rate. Which I can only imagine goes something like this: “Oh, you say the current exchange rate is 1 US Dollar = 15 South African Rand? Let’s just flip that 5 upside-down and make it a 2. That seems a lot better to me.” $10K Transfer “Loss” = $275.

 

• 3rd Party Service (e.g. Xe, Wise, OFX) – Typically have no/minimal fees, and only take a small fraction off the current exchange rate. Obviously must be running some sketchy back-shop operation to make any money, but nonetheless, are the best bet. OFX has been our bread and butter, and essentially charges us about that (i.e. the cost of bread and butter). See what I did there? $10K Transfer “Loss” = $5.

 
As a note that, there of course is a fee that the South African bank charges to “receive” the money, to which a friend here put best, “Why would we ever charge America for sending money to us?! Give us your bloody dollars!”

• OK, let’s get back on track. What does a bank account cost? With most “entry-level” accounts being either free, or charging less than $1 per month, the only expenses are when you attempt to do, well, just about anything. Use your credit card? Fee. Make a payment? Fee. Withdraw money from your very own banks ATM? Fee. Transfer money. Fee. Check your balance. Fee. Send a request asking why you were charged a fee? Fee. I think you get the point.

 

• OK, you’ve sold me. I want to open an account. Who are the “big boys” of the industry? Standard Bank, FNB (i.e. FirstRand), Absa, Nedbank, Capitec. All fairly competitive with each other and all different enough that a quick Reddit search will show a very uniform hate across the board for each. We personally chose Capitec because it’s fun to say in a South African accent: “Keh-Pee-Tech”

 

• Weirdest difference from the US System = Aside from Nelson Mandela being on all the currency, which, wouldn’t be the worst way to say adieu to Andrew Jackson, the strangest disparity between the USA and RSA “monetary systems” is no doubt the method by which individuals pay for any given “service”:​
  
  • Option #1 (The “Just Trust Us” Method) –Payee (i.e. person who is spending the money) provides the Beneficiary (i.e. person who wants the money) literally ALL their bank account information (e.g. bank name, account number, routing number, last 9 digits of social security number, make/model of first car, first pets favorite color). And this of course is done via the least secure way possible (email, text, origami fortune teller). And then Beneficiary proceeds to take money at will. Let the honor games commence
    
  • Option #2 (The “Yeah, But We Don’t Trust You” Method) – Just reverse the above process, with the Beneficiary providing the Payee their secure banking details. However, a “proof of transaction” is typically required before initiating any form of service. Which again, occurs through any non-secure means available.

Finally, a minimal fee is charged by the bank on both sides of the transaction (did you miss the fee section above?). And somehow this arrangement functions fairly efficiently, with almost every US-based privacy law broken. Hurray?

• Summary = Overall, while expats living in South Africa can theoretically live off their “US-based” bank accounts & credit cards, you are not only sacrificing valuable money that could easily go to any of the $15-all-you-can-eat-fairly-decent-sushi bars spread through this country, you are also guaranteeing endless blank stares as you attempt to explain how you don’t want to provide a random stranger all your personal detailed banking information. For us, the simplicity of having a local account made the decision easy. That, and of course our newfound ability to tick that little audit-guaranteeing box on our income tax return declaring a “foreign bank account.” It’s a win/win for all! See you next year Harold Crick!

Sorry, no pics this week, although I do recommend googling “South African Currency” – The combination of Nelson Mandela & safari animals is an unstoppable combination.

Next Post: How to be an Expat, When You Aren't Technically an Expat (Part 2 - Health Insurance) – Please try to contain your excitement for this one.​