Disclaimer: This article may link to products and services from one or more of ExpatDen’s partners. We may receive compensation when you click on those links. Although this may influence how they appear in this article, we try our best to ensure that our readers get access to the best possible products and services in their situations.
I remember opening my first bank account in Thailand. A kind, middle-aged bank teller handled the application. My secretary was along to help translate. Halfway through the process, the teller turned to my secretary and asked, “Does he have a girlfriend?”
Maybe I was lucky that I didn’t, because that account setup seemed to go a lot smoother than anticipated; however, not all my dealings with Thai banks went that well. From being unable to cash foreign currency checks to getting rejected repeatedly by credit card companies, for me, financial matters in Thailand had quite the learning curve.
Now, some ten years since the initial bank teller encounter, I’ve decided to write down my own experience to help you skip that same learning curve. The result is this reference guide for Thailand-based expats to help you in exchanging, sending, receiving, saving and investing money. Please note that I’m no financial advisor or tax professional, so please treat this information accordingly and consult a professional if you seek advice specific to your individual situation.
Contents
- Currency Exchange: How to Get the Best Rate for Thai Baht
- Transfers: Sending Money to (and from) Thailand
- Banks: Opening a Thai Bank Account
- Credit Cards: Loyalty Points and Applying as an Expat
- Checks: How to Cash Domestic and International Checks
- Stocks: How to Open a Brokerage Account
- Taxes: Incentives for Savings and Investments
- Disclaimer
- Questions?
Currency Exchange: How to Get the Best Rate for Thai Baht
There are so many ways to exchange your local currencies to Thai Baht. Options range from cash exchange offices to Bitcoin operators. But who offers the most competitive rate? You can check out my article on how to get the best currency exchange rate in Thailand.
Transfers: Sending Money to (and from) Thailand
Transferring money in to Thailand is a whole topic of its own. I’ve put together a separate guide to sending money to Thailand to showcase the cheapest and fastest way of doing it. While most people think of bank transfers first, in many cases it’s not the cheapest option.
Transferring money out of Thailand works similar, so check out the guide above for some more details on that. There is however one thing to be aware of – transfer restrictions when remitting funds from Thailand abroad: Banks usually only permit people to transfer the equivalent of one year’s salary out of the country. You have to apply for permission to make a transfer abroad and state the reason (e.g. savings, paying for studies abroad, supporting your family), though I’ve never seen anyone ask for proof. Keep this in mind if you consider bringing large amounts of cash into (and out of) the country. The rules will also differ depending on the bank.
Banks: Opening a Thai Bank Account
Banks in Thailand work tend to operate a bit different from what you’re used to back home. Different branches (even of the same bank) tend to enforce their own approval procedures and document requirements. You might need a long list of documents in order to pick up a credit card at one branch, while another may just hand it over after seeing your THB 200 Thai driver license.
I’ve put together a guide on opening a bank account in Thailand that’ll help in navigating things when it comes to financial matters. It also covers other banking basics in Thailand including debit cards.
Credit Cards: Loyalty Points and Applying as an Expat
You can get by in Thailand without a credit or a debit card. You might end up having to pay bills and tickets at the 7/11 or through online banking, but very few things require a credit card. That being said, cards are widely accepted – from supermarkets to restaurants – and using a local card can save you the foreign currency surcharge. In addition, cash back rewards can even give you on the spot discounts of up to 20%. Since those offers are usually dependent on having a card from a specific local bank, a lot of Thais carry a whole stack of cards with them in order to make sure they have one that qualifies for the best discount. I wrote a separate article purely focusing on Thai credit cards for foreigners. It covers the whole application process, required documents, best loyalty program, as well as potential alternatives.
Checks: How to Cash Domestic and International Checks
Checks are still pretty common in Thailand, though bank transfers are slowly replacing them. The most common transactions that use checks are salary and rent payments. One of the more beneficial uses of checks is to make international transfers: in the past I’ve cashed THB checks into bank accounts in Germany. The advantage of that method is that the German bank converts THB to EUR rather than the Thai bank (as is the case with a wire transfer). This results in a slightly better exchange rate in my experience. However, it can take several weeks for the checks to clear and unlike a wire transfer, you won’t know which exchange rate it’s going to be.
Foreign currency checks are a different animal. The first time I tried to cash a USD check with Bangkok Bank, they told me that this option is not available for accounts that were opened less than 6 months ago. I ended up cashing it at a Kasikorn Bank branch (‘Rachadaphisek-Huay Khwang‘). Like everywhere else, it still takes six weeks to get a foreign currency check credited, but at least you can do so immediately after opening an account.
My experience with checks is mostly based on business accounts. I never tried this with a personal account, so I’m not sure what the situation is there and how things have changed since I first tried this several years ago. If you have any experience with this recently, please leave a comment below.
One of the big pros of using checks is that the fees can be lower than for SWIFT transfers. In many cases, you can cash a check for as little as THB 300, making it significantly cheaper than wire transfers if you don’t mind the wait.
Stocks: How to Open a Brokerage Account
If you want to invest money in Thailand, there are some good reasons to go with a brokerage account: there are no capital gains tax on profits from buying and selling shares listed on the SET and dividends can be taxed at a flat rate of 10%. Brokerage fees tend to be very low; Siam Commercial Bank, for example, only charges a transaction fee of 0.25% (with a minimum of THB 100).
You can open a brokerage account without being a resident, but you’ll have to do it in person. In terms of paperwork, it’s one of the most arduous procedures in this article: the ‘standard’ contract by SCB to open an online brokerage account is thirteen pages long.
Similar to online banking in Thailand, the user interface is a bit clunky (see the above example from Siam Commercial Bank), but it gets the job done. Even though it’s SCB, it often seems to be a bit of a smaller scale operation, but in a good way: if you reply to their investor e-mail newsletter with a customer service issue, an actual person will reply to you within a few hours.
For a more detailed guide to dealing with brokers in Thailand, you can read up on Paul Renaud’s advice at thaistocks.com. If you invest significant amounts, it pays to read up on this, especially if you specifically bring funds into Thailand in order to do so.
Taxes: Incentives for Savings and Investments
The Thai government offers a number of tax incentives for savings and investments that can be beneficial – especially so if you’re working in Thailand. Two of the most common investments that receive preferential tax treatment are LTFs and RMFs. Law Alliance, one of the most well-respected tax law firms in the country, did a very good write-up on the tax risks associated with LTFs and RMFs. I recommend you take a good look at that before putting your money into them.
At this point, I really want to repeat that I’m not an accountant or a tax professional. If you decide to get serious about investments, please do your own research or contact a professional for advice. While I’ve done my best to ensure the accuracy (including running it past my own accountant), I can’t guarantee that it’s accurate and you’ll have to use the information at your discretion and without any guarantees. There are some serious tax risks associated with this, so please research things with caution and if in doubt, consult a tax professional.
Long-Term Equity Funds (LTFs)
LTFs are the most popular tax incentivised savings option for the working population of Thailand. In essence, you can put up to 15% (up to a maximum of THB 500,000) of your yearly income into one of these funds and exclude that amount from your income when calculating taxes. The higher your marginal tax rate is, the more interesting this becomes.
Advertisement
There are a number of downsides to this though. You’ll need to keep it invested for at least five years before you can withdraw it without a penalty. If you withdraw before then, you can face severe tax penalties that consist of the originally owed amount plus 1.5% interest per month (that’s a yearly rate of 19.6%!) since the time you originally would have owed the taxes.
More importantly, the long-term equity funds that are eligible for tax savings tend to have a slightly higher management fee, which will eat up part of your tax savings. Since the tax savings only applies in the first year but the management fee applies in all years, I expect to see roughly 50% of my tax savings disappear in the pockets of the bank. Depending on the LTF, the additional fees of the bank can even surpass the tax savings, essentially resulting in additional costs rather than savings.
As a rule of thumb, I only buy an LTF if the management fee is below 1% and my marginal tax rate in that year is at least 20%. Anything worse than that and the tax savings go to the bank. In addition, I make sure to sell it after five years and invest in something with a lower management fee instead.
The LTF with the lowest management fee I have found so far, and the one I buy every year, is Krungsri’s KFLTF50. It’s the closest thing to an ETF for the SET50 I was able to find that was still eligible for tax savings. The overall expenses are at 0.71625% and thus a bit higher than if you went with a non-tax incentivised ETF (e.g. TDEX at 0.485%). Another very convenient reason to go with Krungsri is that if you apply via Krungsri Asset Management, you manage your investments online. Communicating with their English-proficient staff by e-mail is a breeze and they even send a messenger to pick up the application documents. Definitely one of my most hassle-free banking experiences in Thailand.
Retirement Mutual Funds (RMFs)
There are some similarities between RMFs and LTFs: each allows you to invest up to 15% (not more than THB 500,000) of your yearly income while still receiving tax incentives. The main difference is that with an RMF, you’ll have to keep paying in until you are at least 55 years old in order to keep the tax benefits. That makes it immensely inconvenient, especially for younger expats who might only be in the country for a limited number of years. In addition to that, the management costs are going to eat up not only your tax savings, but also your gains beyond that. Then there’s also a significant tax risk associated with it, due to the likelihood of making a mistake over the course of its duration.
Personally, I don’t bother with RMFs at all, but there are situations in which the tax savings could make up for the restrictions and the investment risk. If you are in the top tax bracket and either certain you’ll stay in Thailand permanently or are older than 45 years old, RMFs get really interesting: the potential tax savings are much more significant and keeping up payments in the future will be less of a hassle and risk.
The Stock Market
At the time of writing, one of the biggest Thai tax incentives for private individuals is the lack of a capital gains tax on profits made from buying and selling shares listed on the Stock Exchange of Thailand. This only applies to the difference between the purchasing and selling price. Dividends still get taxed at a rate of 10% or whatever your personal taxation rate is (talk to an accountant about what works out better for you).
As to how to go about opening a trading account, please see the brokerage account section above.
Disclaimer
I hope this article helps you with your own financial decisions. Please note that I’m no financial advisor and this only reflects my personal experience. I did my best to ensure all data is correct and up to date, but I can’t provide any guarantees. If you find any mistakes, please drop me a line. For advice applicable to your individual situation, please consult a professional. Unfortunately, I don’t know anyone in the industry I feel comfortable recommending, so this is really just me covering my own behind 🙂
Questions?
If you have any questions about anything related to money and Thailand, please leave a comment below and I’ll do my best to help you out or find someone who can.
27 comments
Hi I lived in Thailand for 5 years then return to UK when in Thailand had a kbank credit card. Last year i found out i still owe an outstanding amount plus interest . my question is do Kbank except offers of full and final as due to health issue I can’t afford the whole lot but want to offer them a settlement amount to finish this chapter in my life
Thanks Lee
Lots of comments here on funds and regressing from there. How about on this core money subject: getting beyond banks, money remittance, investing in condo’s and nice houses and start direct invest in the SET. i.e. consider financial assets through direct share ownership…not using middlemen. It is possible to beat the market here as most all funds and so called ETF’s mostly consider large capitalized (cap) stocks for investing. Consider, the Thai brokers advocate large cap. stocks for trading and institutions must be obsessed with large cap stocks for liquidity. Hence there is a vacuum of value on many smaller and mid cap stocks which all but get ignored. It is possible to find this through reputable others. The founder E. Ferrari once remarked “I know nothing about engines, for that I have my engineers”.
Hi Karsten, very nicely put summary, thank you very much! I’ve been living in Thailand for a few years now and am tempted to buy an LTF before the end of this year so as to get some interesting tax deductions. Do you think it makes sense to fork out say 500,000 THB in an LTF this year, knowing that in 7 years I’ll almost certainly be back to France, where the resulting money out of this LTF will probably be taxed at a hefty rate in France? What’s your opinion? Thanks
Hello @karstenaichholz:disqus !
The thread is old now but I think this is still the best place to ask: would you recommend any financial advisor you might have been working with in Bangkok?
Nope. In 12 years I haven’t encountered a single one I’d feel comfortable recommending.
My recommendation would be to hire a fee-based advisor based in a nearby financial hub (SG, HK) with a client base operating in Thailand or one in your home country that specializes in expatriates.
Hi Karsten
i quote “the teller turned to my secretary and asked, “Does he have a girlfriend?”
What is gonna happen if assume you have a girlfriend at same time ? and why they asking about this?
thanks
That was the teller being flirtatious in a joking way. It doesn’t really have an impact on the actual account opening. Just showcases a cultural difference as this kind of thing isn’t exactly uncommon here whereas back home that would do more than just raise a few eyebrows.
Hi Karsten,
Many thanks for sharing. This is a very useful article.
I would like to ask, if we are sending our Bangkok salary to home country via Bangkok Bank (or any other local bank) – what range of fees to expect?
How much does it cost to send funds out of Thailand using SWIFT?
There are two fee options when remitting funds:
Charge BEN – Pay the sender fee to Bangkok Bank (400Bt), and have the receiver pay the correspondent bank fee (fees may vary)
Charge OUR – Elect to pay both the sender and receiver fees before sending the funds (1,150Bt for all currencies, except JPY*). Please note, recipients may not receive the funds in full if foreign banks charge extra fees.
* For JPY – 400Bt plus 0.05% of the funds transfer (min. 2,100Bt) per transaction
I am not sure which option is better? BEN or OUR, I plan to send back money to Singapore in SGD currency only.
If the fees are high, i may consider sending back money our a quarterly basis instead. Thank you for your input.
Best,
jwny
Hey Jon – Bangkok Bank will charge you THB 1,150 per transfer. The exchange rate loss is the same, regardless if you do lots of small or one big transfer. The fees of the receiving bank vary. You might want to ask them about it (which can be a hassle) or just do a transfer for the first salary to see what fees show up. There is a chance you might be better off sending it in USD instead of SGD.
[…] them on LINE), pay rent in cash instead of wire transfer (not necessarily a bad thing, considering bank accounts can be tricky), and pay your utility bill at a convenience store instead of having it auto-deducted from your […]
A reader sent in the following comment by e-mail. While I don’t necessarily agree with the points, I think it adds another perspective on the topic of investing, especially when it comes to ETFs vs LTFs/RMFs, that others might find helpful.
Here’s the original unedited comment:
“You may want to review what you wrote on LTF’s and RMF’s though. Yes, average fees of around 2% are a lot higher than the low cost index funds we’re used to back home, but have look at the performance of those fund vs. the SET index and you’ll find that the management fees are well worth it.
For example:
5-year annual return:
Set index: 4.51%
Krungsri Dividend LTF: 7.48% (fee: 2.22%)
Krungsri LTF50: 5.20% (fee: 0.72%)
Remember those are annual returns so a difference of more than 2% per year over 5 years is huge
Looking at 3-year cumulative return:
Set index: -12.22%
UOB Good Corporate Governance LTF: 14.01% (fee: <1.76%)
Sure I've cheery picked those examples, but you'll find ALL Krungsri and UOB LTF's outperformed the SET Index for 3 and 5 years returns.
We have to change our thinking in less developed and less liquid markets like Thailand. Active management has a much easier time here outperforming the index than actively managed funds in the US and European markets. That's why there isn't really any index funds or passive ETF's here.
So it's probably not the best advice for everyone to pull their money out of LTF's and RMF's as soon as possible. And the fees haven't eaten up any return compared to the index.
The management fees are well worth it and in general LTF and RMF funds regularly outperform the index by a wide margin."
My take on this:
My personal opinion is that it's not possible to outsmart a 'working' market long-term. I can see however how there might be an argument that the Thai stock market isn't as transparent and equal as required to make that statement entirely valid. In other words – there might be insider trading going on that favours managed funds.
Maybe the Set Index is calculated without dividends and the funds performance includes dividends
Good post @karstenaichholz:disqus !
I’ve found whenever I apply for a credit card, business or otherwise, they always want me to open a fixed-term deposit for the same amount. Is this your experience?
Nope, never had that problem.
My first personal credit cards were with Kasikorn Bank. At the time I already had a current, savings and company accounts with them. Credit card was the last thing they gave me.
I also have a credit card with Citibank. I don’t have an account with them or anything else. The first card they gave me had a rather low limit, though without my doing they increased it up to four times the original amount.
At Krung Sri I have a credit card and a savings account.
Our company credit cards are at Bangkok Bank. They don’t collect points (unfortunately), but also no requirements.
The purpose for fixed-term deposit is to avert credit risk. The Bank of Thailand does not allow foreigners to owe anything to the bank as its part of efforts against currency manipulation by anyone but the BOT’self. So, in case you swipe the card and do not pay at the end of the invoicing cycle, the fixed-term deposit funds will serve as payment.
I’ve been looking to get some information on investing and savings options in Thailand so this article is a great help!
LTFs sound interesting but 5 years without access is quite a long time especially, as you said, many expats don’t know how long they will stay in Thailand for.
I know many people who have had problems getting approved for a credit card here. My own bank ( SCB ) told me I can only have one if I deposit the amount of credit I would like with them as a guarantee which defeats the object really. I have read that a salary of 100K + Baht per month is needed for some banks to consider approving an expat.
Hi Richard,
I work for one of the worlds largest offshore financial consultancies if you wanted to give me a quick call I would be more than happy to arrange a time for you to pop into our office to go over some of your options.
+662260 6830
Br – Cameron
You could always set up the LTF and let it sit (can stop paying in any time). But yeah, it definitely means you don’t have access to that money for 5 years. Unless you make enough to be in a high tax bracket though, it might not be worth bothering with.
In my experience as little as THB 50,000 is okay for credit cards in terms of a monthly salary. I never had anything lower when I applied, so not sure if they have offers for less than that. Your best chance is probably Kasikorn Bank – they tend to have the lowest requirements and are easiest to work with.
Of course, your investment is not locked for 5 years. LTF and RMF give you personal income tax shield. They are very good if you earn your income here in the Kingdom. The condition is that the investment is held for 5 years to achieve 2 targets: stimulate activities in the SET and prevent short-term speculation. Should you withdraw before the required term, you have to pay back the tax shield. The minimum purchase depends of the unit cost of each fund. Please check the terms of each fund. They are usually well indicated.
Should you require better liquidity but want better return than the average saving account, maybe you would consider other funds that do not have this condition attached. Given the current downward trends, I think it not a bad idea to invest because when things are down, they usually go up afterwards.
Todd, thanks for chiming in and adding some additional points!
From what I understand is that if you withdraw from an LTF/RMF before the required term you not only have to pay back the taxes you saved, but have to pay interest on them as well (at a rate of 1.5% per month). That makes it a possible, though expensive withdrawal.
hi, thanks for your always interesting infos. My question: i live here many years now .. is it also possible with any Thai bank to do the same investments as i do in Europe, meaning i want to buy and sell US or European equities, i want to buy Eurobonds or US bonds, and sometimes listed derivatives, for example in Germany or in Switzerland. Cause i also see you only refer to buying Thai equities, in which i do not have any interest. Thanks for your reply
I use a brokerage account with a German bank for international investments. To be honest, I’m not sure what the process is with Thai banks if you want to purchase equities outside of the country. My guess is, it’s possible, but maybe not online or with all banks. I’ll look into it.
Hi Vince,
You cannot trade International market with a brokerage in Thailand.
Set up shop with brokerage in your home country or you can opt to open a brokerage account in Hong Kong or Singapore which are sound financial cities. The major brokerages have offices there.
any advice how to send money out of Thailand >20k $US per month?
Depends a bit on who is sending it (private individual, company…), where the funds are originally from (e.g. domestic, abroad), what it is for (e.g. dividends, salary) as well as where it goes (e.g. a EUR account, a USD account) and who the recipient is (yourself, a company, etc.).
If you just transfer your own salary home, you can send yourself a THB check if your home bank has better exchange rates than that offered by Thai banks.
For my company (e.g. payments to US companies) I usually do Bangkok Bank wire transfers. It’s not as cheap as checks, but it’s reliable and quick (plus, the company gets invoiced in USD, so sending a THB check is tricky).
Super Rich gives significantly better exchange rates than Bangkok Bank. Is it possible to change THB cash at Super Rich to USD, then take the USD cash to Bangkok Bank and have them do a wire transfer to a US bank account?
Once you deposit it into a ‘standard’ account at Bangkok Bank, they’ll convert it into THB. If it’s a foreign currency account (e.g. in USD), they’ll charge you a 1% deposit fee.
I’m not aware of any possibility to pay cash for a foreign currency transfer (it might exist, never asked). Of course the main issue would be what happens when the transfer doesn’t go through for some reason (it takes a few days to clear). I thus suspect they’ll only allow transfers from actual accounts (possibly also to avoid money laundering issues).
At this point the only way I see to take advantage of this, is to physically transport the cash yourself. If anyone knows of another way to make use of SuperRich exchange rates, I’d be interested in hearing about it as well.