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There are an estimated 6 to 8 million of them. Many of them, at one time or another, have experienced problems with their banking relationships. One of the most common and most annoying problems is that of maintaining a US bank account. In the wake of changes in US and foreign securities laws and regulations, including the Foreign Account Tax Compliance Act (FATCA) rules, many US banks are pushing away Americans who reside abroad. US and foreign securities and other regulatory rules make it very difficult for banks to service this market and, frankly, many US banks are not intimately familiar with this type of customer.

 

Now there’s a simple solution: The ACA-Members/SDFCU Account, developed by American Citizens Abroad, Inc. in cooperation with the State Department Federal Credit Union.

 

ACA has teamed up with the State Department Federal Credit Union (SDFCU) to provide accounts for Americans residing abroad. This is the same account used by Americans working at US embassies as well as many other people living around the world. You can reside full-time or part-time abroad and still qualify. You don’t have to have an address in the US. You certainly don’t have to go to the trouble of creating a US Limited Liability Corporation or some such thing to open an account.

ACA has worked for over 18 months to make this new type of account available to its members. In order to qualify, you must be a US citizen and a member of ACA. ACA’s annual membership fee is $70 (regular membership, renewable yearly); $55 for those 65 or over.

 

ACA-MEMBERS/SDFCU ACCOUNTS / FREQUENTLY ASKED QUESTIONS

 

1. HOW DID SDFCU GET STARTED?

2. IS THE SDFCU CREDIT UNION MANAGED BY OR PART OF THE US STATE DEPARTMENT OF US GOVERNMENT?

3. WHAT IS A CREDIT UNION? WHAT’S THE DIFFERENCE BETWEEN A CREDIT UNION AND A BANK?

4. WHAT “BANKING-LIKE” FINANCIAL SERVICES DOES A CREDIT UNION PROVIDE?

5. IS MONEY IN AN ACA-MEMBERS/SDFCU ACCOUNT AS SAFE AS IT IS IN A BANK?

6. DOES SDFCU PROVIDE FINANCIAL COUNSELING AND CAN I USE MY OWN INVESTMENT ADVISOR?

7. IS THE SDFCU CONSIDERED A FOREIGN ACCOUNT OR A US ACCOUNT FOR FATCA AND FBAR REPORTING?

8. CAN I HAVE AN IRA OR ROTH IRA ACCOUNT OR A 401(K) ACCOUNT?

9. ARE FEES AND LOAN RATES THE SAME AT A CREDIT UNION AS THOSE CHARGED BY BANKS?

10. CAN I DO ONLINE AND MOBILE BANKING WITH SDFCU FROM MY RESIDENCE OUTSIDE OF THE UNITED STATES?

11. DOES SDFCU ISSUE CREDIT AND DEBIT CARDS? WILL MY SDFCU CREDIT OR DEBIT CARD BE ACCEPTED OUTSIDE OF THE UNITED STATES?

12. CAN I GET A MORTGAGE FROM SDFCU TO BUY A PROPERTY? CAN THE PROPERTY BE OVERSEAS?

13. CAN I GET A LOAN FROM THE SDFCU TO PAY FOR MY CHILDREN’S COLLEGE EXPENSES?

14. CAN I HOLD ACCOUNTS WITH THE SDFCU IN CURRENCIES OTHER THAN US DOLLARS?

15. CAN MY NON-US SPOUSE OPEN AN ACCOUNT, OR BE A JOINT OWNER OF MY ACCOUNT? CAN I OPEN AN ACCOUNT FOR MY CHILDREN?

16. IS MY PERSONAL FINANCIAL INFORMATION DISCLOSED TO ACA?

17. WHAT INFORMATION DO I NEED TO PROVIDE TO OPEN AN ACCOUNT WITH THE SDFCU?

18. CAN I OPEN AN ACCOUNT AT SDFCU EVEN IF I LIVE ABROAD?

19. HOW DO YOU OPEN AN ACA-MEMBERS/SDFCU ACCOUNT?

20. READY TO GET AN ACA-MEMBER/SDFCU ACCOUNT?

 

HOW DID SDFCU GET STARTED?

SDFCU was chartered independently in 1935 by a group of eight State Department employees. By 1945, SDFCU had only 975 members. Thanks to the steady growth in membership and the addition of associated member groups, such as, American Citizens Abroad, SDFCU now has over 72,000 members worldwide. back to FAQ list

 

IS THE SDFCU CREDIT UNION MANAGED BY OR PART OF THE US STATE DEPARTMENT OF US GOVERNMENT?

No. The financial institution is the State Department Federal Credit Union. This is entirely separate from the US Department of State. This bears repeating: SDFCU is not part of the US Department of State. It is not owned by the US Government. It is owned by its members/account owners – including you when you join. It just so happens that its origins trace back to the need to provide banking services for State Department employees strewn around the world, who have the same problems as many Americans overseas.  Moreover, the SDFCU, while including in its name the term “Federal,” is not run by the Government or limited to Government employees. Simply put, it has opted to organize itself under federal credit union regulations instead of state banking laws. back to FAQ list

 

WHAT IS A CREDIT UNION? WHAT’S THE DIFFERENCE BETWEEN A CREDIT UNION AND A BANK?

In the United States, a credit union is a not-for-profit organization which is organized in order to provide financial services to its members. Banks, especially those quoted on a stock exchange, are by definition entities which aim to maximize corporate profits. Conversely, credit unions reinvest their "profits" in their member-owners through better dividend and loan rates. There are nearly 100 million members of credit unions in the United States. SDFCU alone has over 67,000 members worldwide. What makes SDFCU the perfect “partner” is that it is accustomed to dealing with account owners around the world, from developed countries like Germany, France and Switzerland to less-developed, less well-known countries. back to FAQ list

 

WHAT “BANKING-LIKE” FINANCIAL SERVICES DOES A CREDIT UNION PROVIDE?

Credit unions provide all the normal services of this type, including checking and savings accounts, credit and debit cards, money market services, loans, online banking and mobile banking. 

The ACA-Members/SDFCU account is simple to open and maintain. Everything can be done online. Credit and debit cards are available. back to FAQ list

 

IS MONEY IN AN ACA-MEMBERS/SDFCU ACCOUNT AS SAFE AS IT IS IN A BANK?

Yes. Member savings are federally insured to at least $250,000 and backed by the United States Government. State Department Federal Credit Union (“SDFCU”), like other federally chartered credit unions in the United States, is regulated and supervised by the National Credit Union Administration, an independent federal agency.

It’s easy to maintain an IRA or one of the other several types of tax-advantaged deferred compensation accounts alongside your ACA-Members/SDFCU account.

A number of financial planning and investment alternatives are available. These include “Share Certificates”, similar to Certificates of Deposit (“CDs”). These come in a variety of forms and yield different rates. Rates are reset monthly. Complete information is available online. back to FAQ list

 

DOES SDFCU PROVIDE FINANCIAL COUNSELING AND CAN I USE MY OWN INVESTMENT ADVISOR?

SDFCU offers the opportunity to work with a certified financial counselor, if you like. This is a free service. Also, you can appoint your own investment advisor, using a power of attorney. What this costs is a matter for you and your investment advisor to agree. back to FAQ list

 

IS THE SDFCU CONSIDERED A FOREIGN ACCOUNT OR A US ACCOUNT FOR FATCA AND FBAR REPORTING?

You will not include it in your Foreign Bank Account Report (FBAR/FinCEN Form 1124) or Form 8938 (Statement of Foreign Financial Assets; which is attached to your regular Form 1040). It is US dollar denominated. You can “marry it up” with your financial planning including savings, retirement and college/school fees planning. Study the free information and consult your advisors. But remember, this account is a new thing and he or she may need to do a little homework.

SDFCU will introduce you to a financial counselor if you like or you can appoint your own financial advisor or investment manager. You do not have to say goodbye to your existing advisor/manager.

Many people will want to keep their local bank account wherever they live. The drycleaner in London will still want to debit your British Pound-denominated bank account down the street. back to FAQ list

 

CAN I HAVE AN IRA OR ROTH IRA ACCOUNT OR A 401(K) ACCOUNT?

SDFCU does offer IRA accounts. SDFCU does not offer 401K accounts but does have investment advisors available to discuss retirement options through a partnership with Advisors Plus. back to FAQ list

 

ARE FEES AND LOAN RATES THE SAME AT A CREDIT UNION AS THOSE CHARGED BY BANKS?

Because credit unions are non-profit organizations, they charge fees and loan rates which are generally lower than those charged by banks, and they pay deposit rates which are generally slightly higher than those in banks.  Checking is free. Credit cards currently have no annual fees. back to FAQ list

 

CAN I DO ONLINE AND MOBILE BANKING WITH SDFCU FROM MY RESIDENCE OUTSIDE OF THE UNITED STATES?

Yes, online and mobile are easy to use and secure. back to FAQ list

 

DOES SDFCU ISSUE CREDIT AND DEBIT CARDS? WILL MY SDFCU CREDIT OR DEBIT CARD BE ACCEPTED OUTSIDE OF THE UNITED STATES?

SDFCU issues both credit and debit cards, always with EMV-enabled technology therefore with higher security than cards with pin alone, which many US banks still issue today. The cards are accepted almost everywhere outside of the United States. back to FAQ list

 

CAN I GET A MORTGAGE FROM SDFCU TO BUY A PROPERTY? CAN THE PROPERTY BE OVERSEAS?

The SDFCU provides mortgages to buy property, but the property must be in the United States. As a member of the SDFCU through ACA, you may be able to qualify your home in the United States as a primary residence even if you live overseas and are not currently occupying the property. This qualifies you for better terms on the loan, but there are regulatory restrictions so not everyone may qualify. SDFCU will help you understand your ability to qualify based on individual circumstances.  In addition, SDFCU offers mortgages on second properties, again in the US, at the same rate as first properties, rather than a higher investment property rate. back to FAQ list

 

CAN I GET A LOAN FROM THE SDFCU TO PAY FOR MY CHILDREN’S COLLEGE EXPENSES?

Yes, SDFCU offers personal loans that may be used for educational costs. These are not run through any federal loan program. back to FAQ list

 

CAN I HOLD ACCOUNTS WITH THE SDFCU IN CURRENCIES OTHER THAN US DOLLARS?

No, SDFCU offers accounts denominated only in US dollars. back to FAQ list

 

CAN MY NON-US SPOUSE OPEN AN ACCOUNT, OR BE A JOINT OWNER OF MY ACCOUNT? CAN I OPEN AN ACCOUNT FOR MY CHILDREN?

A non-US spouse can be a joint owner of the account of the American member, but cannot hold his or her own account. A child 17 or older can open his or her own account. SDFCU also has custodian and minor accounts available for children. back to FAQ list

 

IS MY PERSONAL FINANCIAL INFORMATION DISCLOSED TO ACA?

No. As an account holder, your details and your financial information are not disclosed to ACA. ACA is introducing you; you alone, without any further involvement by ACA, to deal with the details of opening and maintaining your account. The only information that ACA transmits to SDFCU is a confirmation of your status as an ACA member. SDFCU does not transmit information about an SDFCU member/account holder to any unaffiliated third party.  Detailed information about privacy can be found on the SDFCU website. back to FAQ list

  

WHAT INFORMATION DO I NEED TO PROVIDE TO OPEN AN ACCOUNT WITH THE SDFCU?

The account opening process can be initiated easily online, and the basic information required includes a copy of the individual’s US passport and a copy of a document which provides proof of residence, such as a utility bill.  Other information might be requested by SDFCU depending upon the individual situation of the person, or the place of residence overseas. back to FAQ list

 

CAN I OPEN AN ACCOUNT AT SDFCU EVEN IF I LIVE ABROAD?

Yes, this is one of the greatest advantages of ACA working with SDFCU. SDFCU is one of the few credit unions in the United States which accepts members who live outside the country. Dues-paying members of American Citizens Abroad, Inc. are able to take advantage of this because ACA has been approved as an associated group by SDFCU and by the relevant supervisory body, the National Credit Union Administration. back to FAQ list

 

HOW DO YOU OPEN AN ACA-MEMBERS/SDFCU ACCOUNT?

To open an ACA-Members/SDFCU Account, you will need to provide the usual due diligence information that you would need to open a bank account anywhere. A photo ID (best would be your American passport) and something showing your residence, such as a utility bill with your name and address, should suffice. You may be asked to give a signed Form W-9 showing that you are a US taxpayer. And you must be a member of ACA, which costs only $70 per year – $55 per year if you’re over 65.

You need not be a resident of a foreign country, just a member of ACA. ACA has many members who reside in the US. Maybe the individual used to reside abroad. Maybe he or she splits the year between the US and elsewhere. back to FAQ list

 

READY TO GET AN ACA-MEBMER/SDFCU ACCOUNT?

 

IF YOU ARE ALREADY A MEMBER OF ACA, GREAT!

To open your ACA-Members/SDFCU account, go directly to the SDFCU website here to join and select the green "Join" button.  Proceed to join by choosing American Citizens Abroad (ACA) under the eligibility "I qualify through my relationship with one of your organizational affiliates".

 

IF YOU'RE NOT ALREADY A MEMBER OF ACA, JOIN NOW

To join ACA, go to "Join Now" on the ACA website and Membership Levels and Benefits are explained there. You will receive a confirmation email upon completion of your ACA membership. Then, to open your ACA-Members/SDFCU account, go directly to the SDFCU website here to join and select the green "Join" button.  Proceed to join by choosing American Citizens Abroad (ACA) under the eligibility "I qualify through my relationship with one of your organizational affiliates".