If you often make payments overseas, today’s online money specialists can help you keep on top of your business overseas or take care of family members back home from one flexible account. Foreign currency accounts aren’t just about helping you manage your finances — you’ll also save time and money with streamlined transactions.
A foreign currency account is a type of bank account that allows you to send and receive funds in multiple foreign currencies, potentially changing your current way of conducting international business. Through these multi-currency accounts, funds are either exchanged into Canadian dollars or held in the currency of the transaction until you’re ready to exchange them.
You can use a foreign currency account for business and personal needs. And depending on the account, your balance may even earn you interest.
An international bank like HSBC may allow you to deposit and withdraw money from your foreign currency account at a branch or online. Some only offer major currencies — dollars, pounds and yen, for example — for withdrawal at a branch.
A foreign currency GICs is a specific type of investment product through which you can invest in foreign currencies from a CAD-based account. Experienced investors will also find forex trading tools that simplify buying and selling foreign currencies.
How does a foreign currency account work?
Your typical bank account generally converts money to and from CAD for transactions in foreign currencies. A foreign currency account, however, allows you to send and receive funds in multiple currencies. You save time with a streamlined transaction and money by avoiding the high fees that come with conversions. And you won’t need to worry about short-term currency fluctuations affecting your bottom line.
The ability to switch among currencies helps you to take advantage of strong exchange rates and send money overseas without the extra charges you’d typically pay for bank-to-bank or wire transfers.
Currencies typically accepted into a foreign currency account include:
US dollars (USD)
Australian dollars (AUD)
Great Britain pound sterling (GBP)
Hong Kong dollars (HKD)
Canadian dollars (CAD)
Japanese yen (JPY)
New Zealand dollars (NZD)
Singapore dollars (SGD)
Renminbi (RMB), though currency restrictions may apply
Case Study: Matt conducts business through his foreign currency account
Matt buys products from China to sells to his customers in North America. Without a foreign currency account, he converted Canadian dollars into Chinese renminbi when purchasing items from suppliers and then converted US dollars or Mexican pesos to Canadian dollars when receiving payments from customers.
The process not only took time for banks to move his money and fees per transaction, but also introduced the risk of losing his hard-earned profits to exchange rate fluctuations when converting across currencies.
Today, his foreign currency account integrates the ability to send and receive money in the currencies in which he frequently conducts business. He can buy from suppliers using Chinese renminbi and receive payments from customers in their own currencies directly into his Canadian-based bank account. When the exchange rate is strong, he converts the foreign currencies in his account to Canadian dollars quickly and affordably.
Pros and cons of a foreign currency account
Convenient borderless accounts can save you time and money, but they aren’t without risks. Protect yourself by watching out for these pros and cons:
Hold multiple currencies. Send and receive funds in different currencies while avoiding an exchange between them. If you deal in minor or exotic foreign currencies, look into international money transfer specialists that accept a wider range of less common transactions.
Leverage exchange rates. Most accounts let you switch among currencies to take advantage of strong exchange rates, which can keep a ton of money in your pocket if you conduct large business transactions.
Earn interest on your currencies. Many foreign currency accounts pay you interest on select currencies. Interest is typically offered in tiers, with better rates going to larger balances.
Avoidable monthly fees. Depending on your business, some institutions may waive maintenance and other fees on your foreign currency accounts.
Overdraft protection. If you’re unsure of the timing of your foreign currency payments, many banks allow you to go into a temporary deficit on specific currencies. Although you may be on the hook for fees.
Miscellaneous fees. You can expect to be charged special cash handling and overdraft fees on some of your transactions. Find the lowest fees you’re eligible for when deciding on an account.
High minimums. Your bank may require a daily minimum before hitting you with high fees. HSBC and other international banks don’t require minimums, however.
Low interest. If your account offers interest, don’t expect the rate to be as high as your standard savings account. Foreign currency accounts are notorious for low interest rates.
Currency value changes. The value of your money fluctuates constantly. A sudden rise or fall affects the total balance of your foreign currency account.
How do I compare foreign currency accounts?
Find a foreign currency account that’s flexible enough for your needs by comparing accounts across multiple banks. Weigh factors among them that include:
Supported currencies. Many banks support at least a handful of major currencies, but make sure those you frequently conduct business in are accepted.
Account fees. Ask for a complete list of fees to avoid the surprise of a high maintenance fee each month on your account. Look also for processing or handling fees on specific currencies and transactions.
Currency conversion charges. In addition to exchange rate differences, your bank might charging a fee each time you convert your money into another currency.
Transfer amounts. Transaction limitations vary by bank, but you’ll want to make sure your account can handle both minimum and maximum payment amounts that are typical for your business.
Turnaround speed. Before choosing an account, learn how long the typical transaction takes between your home bank and accounts overseas.
Flexibility and support. Select foreign currency accounts allow for transfers, deposits and withdrawals over the phone, online or at a branch. Ask about fees related to each option.
What fees can I expect?
A foreign currency account can come with monthly, maintenance and transaction fees that can quickly eat into your balance. Shop around for a bank and account that minimizes such charges as:
Deposit or withdrawal fees. Many banks offer unlimited deposits or allow a set number of fee-free withdrawals monthly.
Monthly service charges. If you can’t find an account with no service fees, look for one that waives fees with high balances. And make sure that balance meets your business’s needs.
Transaction fees. Many international banks have worldwide partnerships that can minimize how much you’re charged for each transaction.
Cash-handling fees. Some banks limit how much you can deposit to your account within a specified period. If you exceed this limit, you’re charged a fee to process future deposits.
Overdraft fees. Like typical bank accounts, you could pay overdraft fees if your account balance dips below zero.
When comparing accounts, know roughly how many transactions you expect to conduct through your account. Many accounts offer free unlimited deposits for high numbers of transactions monthly.
How do I open a foreign currency account?
Signing up for a foreign currency account isn’t much different from opening any other type of bank account. You’ll need your basic personal and financial information, along with the standard forms of government-issued ID.
Focus on banks or credit unions that offer foreign currency accounts, like:
TD Canada Trust
Meridian Credit Union
You may be able to start the process of opening an account online. If not, call a representative to get started.
Compare with money transfer services
Use the currency transfer calculator below by entering the amount you want to send and choose the currency you are sending to.
If you make transactions in other currencies on a regular basis, a foreign currency account can help save time and money. Whether it’s for personal or business purposes, this type of account can allow you to manage multiple currencies, get better exchange rates and streamline the process of sending and receiving money. Foreign transaction accounts are available from many large banks; just make sure to be aware of any fees before you sign up.
Find out more about bank accounts including chequing accounts, savings accounts, GICs and money market accounts by checking out our detailed bank account guide.
Frequently asked questions
Yes. A foreign currency account is a solid option for people living abroad with financial obligations in Canada.
Yes. You’ll typically pay a nominal fee for transfers, but you might also pay conversion fees, depending on the bank.
No. This type of account doesn’t come with a debit card. If you did want to access your money while overseas, you would need to make a possibly inconvenient trip to a branch location.
Yes. However, it could be considered an over-the-counter transaction that incurs a separate charge.
Shirley Liu is Finder's global program manager. She was previously the publisher for banking and investments and has also written comparisons for energy, money transfers, Uber Eats and many other topics. Shirley has a Master of Commerce and a Bachelor of Media, Journalism and Communications from the University of New South Wales. She is passionate about helping people find the best deal for their needs.
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