Posted by forex at 8:38 AM
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1. Evaluate your decision to invest your money in a foreign CD carefully. Often, foreign banks are not protected by agencies similar to the U.S. Federal Deposit Insurance Corporation (FDIC). This means that if the bank in question becomes insolvent, you may lose your money, warns CNNMoney.com. Foreign banks often compensate investors for the additional risk by offering higher yields. In addition, if the foreign currency weakens compared to the dollar, any advantage in yield could be wiped out by this shift. For most investors, it's more sensible to keep foreign CDs if you live, work, vacation or do business in that country on a regular basis.
2. Contact a foreign bank in the country where you're interested in opening an account. Use a major, reputable bank. This will decrease the chances that you will suffer a loss due to bank insolvency. Sometimes foreign countries operate state-run banking monopolies, so you may not have many choices to make.
3. Contact the bank that you want to do business with directly and find out the procedure for opening an account. In some countries, you may need to visit the bank in person in order to open the account. There also may be a fee involved as a foreigner. In many cases, however, you'll be able to open the account over the phone or online.
4. Complete the forms required to open an account. According to the Financial Web website, some foreign banks may require a credit check and will need two forms of identification, your Social Security number and a birth certificate.
5. Convert your dollars into the local currency of the bank, paying all of the associated fees. The bank should be able to perform a currency conversion on demand for a fee.
6. Purchase CDs in the appropriate foreign currency in the denomination and maturity date that is offered.