Credit Card or Debit Card Tied To Offshore Bank Accounts

Most of my knowledge about offshore bank accounts comes from my clients’ experiences. This past week one of my new clients spoke with me about an offshore bank account he had previously established and funded. I asked him how he accesses his money from a bank located in another country. Specifically, I asked whether the bank issued him a debit card which he uses to make payments in the U.S. or whether he uses a credit card tied to his offshore bank account.

The client told me that he uses a credit card to charge his U.S. expenses and that the foreign bank automatically pays the credit card from his checking account. He explained that he cannot use a debit card. The reason is that, according to this client, courts in the U.S. consider a debit card to be a negotiable asset, and a creditor can get an order from a U.S. court either levying on the debit card or permitting the creditor to use the debit card to pay the judgment. The client states that a foreign bank will not block a U.S. court order which forcibly withdraws money with a debtor’s debit card.

I do not know whether the client is accurately explaining the difference between using a debit card and credit card tied to an offshore account. I do recall that the IRS has cracked down on offshore credit cards used to evade reporting income deposited in offshore accounts. Otherwise, I present the information for readers to evaluate for themselves.

posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida