Manage your transactions abroad with a foreign currency account

Keep track of worldwide financial obligations from one place.

If you often make payments abroad, 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. These foreign currency accounts aren’t just about helping you manage your finances – you’ll also save time and money with streamlined transactions.

What is a foreign currency account?

A foreign currency account, also called a multicurrency or borderless account, is a type of account that lets you send and receive funds in multiple foreign currencies, potentially changing your current way of conducting international business. Through these borderless accounts, funds are either exchanged into pounds sterling 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 or Barclays may allow you to deposit and withdraw money from your foreign currency account at a branch or online. Some only offer major currencies – pounds, euros and dollars, for example – for withdrawal at a branch.

For the more experienced investors, there are also 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 pounds sterling for transactions in foreign currencies. However, a foreign currency account 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 wire or bank-to-bank transfers.

Currencies typically accepted into a foreign currency account include:

  • Great Britain pounds sterling (GBP)
  • euros (EUR)
  • Hong Kong dollars (HKD)
  • US dollars (USD)
  • Australian dollars (AUD)
  • Canadian dollars (CAD)
  • Japanese yen (JPY)
  • New Zealand dollars (NZD)
  • Singapore dollars (SGD)
  • Renminbi (RMB), though currency restrictions often apply

What are the 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:

Pros

  • 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 banks 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 charged a fee.

Cons

  • 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 minimum. Some banks require a minimum monthly account balance. Find one that matches your cash flow to avoid high fees and penalties.
  • Account fees. Ask for a complete list of fees to avoid the surprise of a high maintenance fee on your account each month. Look also for processing or handling fees on specific currencies and transactions.
  • Currency conversion charges. In addition to exchange rate differences, your bank might charge a fee each time you convert your money into another currency.
  • Transfer amounts. Transaction limitations vary by bank, so you’ll want to make sure your account can handle payment amounts typical for your business – minimums and maximums.
  • Turnaround speed. Before choosing an account, learn how long the typical transaction takes between your home bank and accounts overseas.
  • Flexibility and support. Some foreign currency accounts allow for transfers, deposits and withdrawals over the phone, online or at a branch. Ask about fees related to each option.

Can I only get a foreign currency account from a high street bank?

No, there are a selection of digital-only and app-based financial services providers that offer competitive foreign currency transfer services, as well as accounts you can use while travelling. These include:

  • Starling Bank. The digital challenger bank not only offers fee-free overseas spending with its debit card, making it one of the most-pain-free ways to access and spend your money abroad, but it also offers existing current account holders the option to open a second Euro-denominated account. Transfers between the two accounts don’t incur any fees, while the currency exchange will be made at the interbank exchange rate. You can use a single debit card to manage both your existing GBP account and the EUR account, by switching a setting in the Starling Bank app.
  • Revolut. The digital-only banking app offers several accounts which include an array of useful features for frequent travellers. These include no conversion or bank fees on spending overseas, alongside fee-free cash withdrawals up to £800 a month, depending on your account.
  • Wise. This money transfer service offers a low-cost way to send cash internationally in a range of popular currencies. The firm also offers a multi-currency account, allowing you to manage your money in up to 50 currencies and receive money in up to 10 currencies, depending on where you are based. Wise doesn’t charge multi-currency account holders any fees when spending in any of the currencies held in the account.

What fees can I expect?

A borderless account can come with monthly, maintenance and transaction fees that could quickly eat into your balance. Shop around for a bank and account that minimises charges such 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 minimise 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 that offer foreign currency accounts, like:

  • HSBC
  • Barclays
  • Santander
  • Metro Bank
  • Citibank
  • Halifax

You may be able to start the process of opening an account online. If not, call a representative to get started.

Bottom line

If you make transactions in other currencies on a regular basis, a borderless 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.

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