What are the advantages and disadvantages of having a multi currency account?
Multi-currency bank accounts offer users the ability to hold different currencies within the same account and the potential to save on certain money currency transactions. While multi-currency accounts might be beneficial for specific individuals and businesses, like all bank accounts, they come with their advantages and disadvantages.
Here we analyse the pros and cons of having this type of bank account:
The pros of multi-currency accounts
There are multiple advantages to having a multi-currency bank account. Transactions in various currencies are quick and simple, and there is no need to hold separate bank accounts for each currency. Businesses can carry out all of the usual transactions they would with a regular bank account, such as sending money, making withdrawals, paying employees and receiving deposits – but in different currencies.
Finances can be moved at a lower cost than a standard sterling-only bank account as they usually charge currency exchange fees. Businesses can also save on company expenses with a multi-currency account as transactions with the currencies active on the account are excluded from exchange conversion fees.
Business owners can choose a multi-currency account that protects against negative forex fluctuations. For example, most banks will allow you to pre-book forward currency exchanges as a hedge, and you can switch your currencies to more favourable options at little to no cost at all.
Additional benefits include:
- Immediate and safe access to accounts in any part of the world via online banking or an app
- Grow cash and protect it in an offshore jurisdiction securely, balancing business risk
- Instantly download reports to assess and monitor account transactions
- Receive excellent customer service in the format that suits you best – such as phone or live chat – around the clock
- Some multi-currency accounts also offer preferential access to other premium services such as business loans, savings or other products
The cons of multi-currency accounts
While there are a wealth of benefits included in having a multi-currency account, there are also a few disadvantages. Not all accounts will include the currencies that you need for your business activities, and sometimes the preferential exchange rates may not be available, and other forex companies may be charging less.
There may also be requirements to maintain a minimum balance for the bank account to avoid maintenance fees. ‘Fee-free’ offers may include hidden charges, so it is essential to have all the account information before making your choice. For example, some transfers may only be fee-free when they are made to people who have accounts with the same bank overseas, or to accounts that are only in your name.
Is a multi-currency account right for me?
Multi-currency accounts are ideal for businesses which transact abroad, people who work abroad, companies who hire and pay contractors and freelancers abroad and investors who deal with multiple currencies. Multi-currency accounts make it easier for businesses to bank in a range of currencies without needing to maintain separate accounts and often they have exclusive and favourable fees attached to them.
However, when deciding if a multi-currency account is suitable for your business, it’s essential to review what the market has to offer. When an account includes an introductory offer, it is key to note that perhaps the offer is for a limited time only. While an offer may be great for the business in the short-term, fees may increase in the long-term.
To find the right multi-currency account, regularly check what the market has to offer and research customer feedback to understand what the feedback is from other business users or investors, this will help you to make a confident choice.