It seems like every day there is a new way to connect with people around the world. Technology allows us to keep in touch with loved ones on the other side of the globe and purchase goods and services from international businesses too.
The problem? Most countries have their own currency, and things can get complicated fast if you’re trying to send money abroad but need to convert currency from AUD in the process.
A multi-currency account can streamline how you send or receive money. Whether you’re using it for business purposes or personal use, a global currency account provides added freedom and removes borders.
Here’s everything you need to know about what a multi-currency account is, how it works, and whether this type of account is the right answer for you.
What is a multi-currency account?
A multi-currency account is just what it sounds like. It’s a type of bank account that allows you to send, receive, and hold more than one currency. Rather than opening several bank accounts with different account numbers to keep track of, a multi-currency account allows you to use a single account number for each currency type.
There are plenty of financial services institutions that will help you open a multi-currency account. Often, they’ll be able to handle services for the Australian dollar, Chinese yuan, Hong Kong dollar, United States dollar, British pound, Singapore dollar, Japanese yen, and more.
Companies like ANZ and Westpac offer multi-currency accounts to Australians, and more global institutions like Citibank or HSBC are also an option to explore. Before you open your foreign currency account, make sure to explore all your options to find the best type of account for your financial needs.
How does a multi-currency account work?
A multi-currency account works essentially the same as your standard bank account. Although the services will change depending on where you open your account, you can expect the ability to carry out the standard account actions including:
- Withdrawing money
- Sending and receiving payments
- Access to your funds for cheques or electronic transfers
- Earning interest on your account total (depending on the institution)
In the same way, you may run into similar types of fees on your global currency account as you would your standard bank account. You may see fees on withdrawals, open fees, transfer fees, and more. The amount or frequency of these fees will vary, but you will be able to find these out before opening your account if you ask the agent.
Beyond that, you shouldn’t expect any additional services for your multi-currency account. Most of it will be intuitive and familiar based on your other bank accounts.
Pros and cons of a multi-currency account
Not everyone needs a multi-currency account. If you’re debating whether this type of account is the right option for you, consider what your needs and goals are. Make a list of the reasons your current bank account isn’t enough and what additional banking services you need. When you know exactly what you’re looking for, consider the following pros and cons of multi-currency accounts.
Advantages of foreign currency accounts
Convenience is the most significant benefit to a global currency account. If you’re running a business, you’ll save time and avoid confusion with a single account for all of your clients. You can also avoid the fluctuation of foreign exchanges. Even if you’re only using the account as an individual, avoiding losses in conversion and exchange fees can add tremendous value to your bottom line.
People who make numerous transfers using different currencies should consider opening a multi-currency account. Beyond the savings, they’re also easy to use. When you’re on the go and managing communications in different time zones, the last thing you need is a complicated bank account.
Disadvantages of foreign currency accounts
The disadvantage of multi-currency accounts comes down to additional fees. Many traditional banks that offer these types of accounts will charge a fee to open the account. There also may be fees per transaction and for the annual maintenance of the account.
While the fees may not be significant individually, they do add up over time — particularly if you’re an individual or business who makes multiple transactions per day. There may be some way to negotiate the various fees with your bank agent, but almost everyone can expect to pay something.
If you want to understand what the fees would amount to for your account, add up an average number of transactions per year. Compare that amount with the kinds of currency exchange rates that you typically see and decide which you’re more comfortable paying. Remember, multi-currency accounts are not the only way to make international money transfers. In fact, after weighing the pros and cons, you might decide there’s an easier option for you.
Do I need a multi-currency account?
For those who want a quick way to assess whether they need a multi-currency account, we’ve made a list of the most common uses. If you regularly find yourself in most of these instances, you may benefit from opening a global currency account.
- Send and receive international payments?
- Sell your products and services online, across international borders?
- Employ freelancers (or staff members) who work in other countries?
- Send money to friends or family in different countries?
- Work with international clients in a consultancy?
If you said yes to more than two of these questions, consider opening an account to save yourself money, time, and daily frustration.
What are alternatives to a multi-currency account?
Money transfer services like Western Union allow you to send money to over 200 countries and territories without a multi-currency account. In fact, you can start sending money online or in person using your existing bank account. In most cases, you’ll get the same convenience without needing to open a new bank account.