What is a multi-currency bank account and how do they work?
For individuals and businesses who deal with various currencies, a multi-currency bank account can be useful. Here we take a look at how these accounts work and who they might benefit.
What is a multi-currency bank account?
If your business operates across several countries and uses different currencies, a multi-currency bank account may prove to be invaluable in mitigating fees for foreign currency exchange. It also makes it easy and convenient to manage different currency balances and transactions in a single place.
Demand for this type of account is on the rise due to a range of factors, primarily concerns around currency fluctuations affected by Brexit and global politics. Businesses are keen to protect themselves from changes in exchange rates and are opting for multi-currency accounts for Euros and US dollars in particular.
What are the features of a multi-currency bank account?
Every bank will offer something slightly different, such as varied interest rates, different charging structures and linked benefits such as savings accounts or overdrafts. However, standard features will typically include:
- The ability to hold a range of different currencies within a single account – such as British pounds, Euros and American dollars. Within the account, you will be able to transact with each of the held currencies- making it far easier to deal with different accounts and to manage your transactions as you only have to refer to one account. Additionally, it is possible to download reports for each currency to see all deposits, withdrawals, payments, and so forth.
- Lower fees compared to holding various and separate currency accounts in different countries. With standalone accounts, each bank may charge a monthly fee for operating the account or require a minimum balance. The single multi-currency account allows you to hold all necessary currencies; however, only paying one set of business banking fees where applicable.
- Ease of use, with features such as a standard set of login details, apps and online banking benefits. Other facilities may be on offer too, such as competitive overdraft fees, telephone banking, affordable business loans and other features and benefits.
Who can open a multi-currency account?
This type of account is widely on offer to UK businesses, but some may be on offer to individuals too. Most providers will require you to have an active sterling account, be a UK resident and aged at least 18. You may also be subject to a credit check.
Who might this type of account be useful for?
In the vast majority of cases, multi-currency accounts are designed for businesses and are useful when:
- Trading or investing internationally, this might be to import, export or both
- Trading online as an e-commerce retailer, selling across a range of marketplaces, such as AliExpress, eBay and Amazon
- Selling services or goods to overseas buyers in different currencies
- Working with freelancers overseas or employ staff in different countries
- You, yourself, are a freelancer or contractor who works with clients abroad regularly and are paid in a local currency
How does the account work?
Multi-currency bank accounts are similar to standard bank current accounts; you can:
- Withdraw payments when you need to, send payments and receive them as required
- Access funds via your debit card, wire transfers, electronic payments and cheque
- Sometimes receive variable rates of interest, depending upon on the currency held
- In terms of fees, these will vary according to the provider. There will usually be:
- A monthly account fee
- A charge for withdrawing or depositing currency payments outside the set values
- A charge for transfers or deposits of certain currencies
- Charges for sending money to customers of other banks (fees are waived when payments are made to customers using the same bank)
How can I find the right multi-currency account?
There are various options on the market, so it is worth searching the latest offers on the best buy tables. Look for accounts that offer the features that you need. For example, you might prefer to bank via an app, to access a contact centre around the clock or even to bank entirely online without needing to use a branch for any purpose.
Businesses might also be interested in favourable rates for linked services such as savings, overdrafts and overseas business travel services. Companies should determine which account will best suit the firm’s needs and transaction requirements so that they can calculate a cost profile based upon each typical transaction.
Look at customer reviews to see what others think of the bank and the accounts on offer. Last but not least, check that any bank in which you are interested is regulated and authorised by the FCA and subject to EU legislation, particularly where deposit protections are concerned.