Opening a euro savings account

There are a number of advantages in opening a euro savings account. It is very easy to open an overseas euro account as a citizen of the United States of America without any major hassles. But you do need to declare any income from the account every year and report it to the Internal Revenue Service if it exceeds an amount of $10000. 

The benefits or uses of opening a euro savings account are as follows 

• It is a very good way to hedge you against any fluctuations in currency value.
• It is useful when you are preparing for a huge purchase which is largely euro dominated.
• You can also use it if you are planning on a vacation in Europe in the near future. This way you do not need to worry about traveler’s checks or overseas credit cards with high operating fees. You can just use your euro account like you would use any other account while you are in Europe.
• It is a brilliant way to diversity your investment portfolio given that the local markets have taken a beating after the recent subprime mortgage crisis.  

Instructions to open a euro savings account 

• You will first have to contact an international bank that has a European branch. After doing so, try to find out all the fees that will be involved in any currency conversion costs and other services. There are many international banks with English speaking customer service representatives. This includes HSBC, Barclays, Royal Bank of Scotland, Lloyds TSB and nationwide international. You can easily open a bank account as long as you promise a substantial initial deposit. You may also be asked for your credit history if you already have a bank account in the United States. If you need an ATM card, look for a bank which has services in the country of your preference.
• Try to find out all the terms and conditions before you take a step to open an account. Many times, the international accounts will require you to have a high minimum balance. You will first have to find out what this minimum balance is and what sort of penalties will be imposed if you fail to maintain this minimum balance. The market interest rates set by the banks in Europe will be different from that of the United States. You might either gain or lose depending on the financial climate in the particular zone. The banks in Europe set their interest rates based on the euro zone rates which are prescribed by the European central bank. You will also need to pay for currency conversion costs if you are paying in dollars directly. Also check with the bank whether they have online banking facilities.
• You will need to declare any income that you gain from the euro savings account. The form required to do this is the treasury department form 90-22.1. Make sure you fill it up and pay your taxes annually. Even if you are earning in Euros you will need to pay taxes in dollars.