Multi-Currency Accounts

It is a rare expat who does not have bills to pay in two countries often which need different currencies to settle. Learn how offshore savings accounts can help you keep your money where you need it.

There are three principal currencies typically available for expatriates to operate through (though there are substantial variations on these themes); the principal currencies are the US Dollar, British Sterling and the European Union’s Euro. In the Far East, it is usual to find multi-currency accounts using the Japanese Yen instead of the Euro. In many countries, it is fairly common to find bank accounts which will allow you to operate US Dollar denominated accounts in tandem with the home currency, but as such, there are pros and cons to this type of account as well.

Some of your local bank will offer multi-currency accounts locally, so you can ask and shop around. For example in Hong Kong your HSBC account can be linked to USD and EUR accounts, but you will need a minimum deposit.

The Pros

The advantages of operating a multi-currency bank account include:

• Convenience – many people like to keep their banking “under one roof” as this saves on the paperwork and when there is an issue, hopefully you only need to make one call;
• Currency transfers – if you are operating a multi-currency account you can arrange transfers between accounts very quickly and simply, frequently just by going online – when you need currency in a hurry to pay a bill back home, this can be your solution;
• Maintaining a Strong Banking Relationship – if you open a multi-currency account with a bank in your home country for use overseas, then you will be effectively maintaining a banking relationship which you can use when you return home after your stint overseas. Do not underestimate the importance of this, as you will suffer deterioration in your credit file and score, simply because you will not have any credit or bill-paying activity back home – this is where a strong banking relationship will come into play.
• Accessing better rates – Some currency deposit accounts will offer you better rates than in the local currency, for example in Singapore a SGD account will hardly bring you 1% AER when a Euro denominated account will give you over 2%.

The Cons

The disadvantages of operating multi-currency accounts include:

• Currency Exchange Rate – the exchange rate for transferring funds between different currency accounts is set by the bank holding the accounts. This almost inevitably leads to an exchange rate which is not as competitive as that you may find from other sources;
• Charging Structures – banks incur additional costs for administration and maintenance of a multi-currency account so expect to pay more in charges for banking services you otherwise may expect to be provided as free or low-cost with other accounts;
• High Minimum Deposit Levels – banks providing multi-currency accounts are looking for customers with higher net worth than the typical banking client, for this reason, multi-currency accounts typically require higher minimum deposit levels than other accounts; and
• Higher Qualification Levels – following from the previous point, there are higher minimum qualification levels for opening multi-currency accounts including higher minimum salary levels, though for the majority of working expatriates this should not be an issue.

Multi-currency account providers

Multi-currency accounts are typically available from major banks with a global presence; here is a list of several but it is by no means exhaustive:

• HSBC International– A British-based bank with extensive representation around the world offering the Flexible International current account;
• Lloyds International – another British bank with offshore activities administered from the Isle of Man;
• Bank of America – a US bank with extensive overseas representation;
• RBS International – a British-based bank operating the Royalties International range of accounts.

Make sure you shop around before you decide to open an account. It is vital to compare the charging structures and exchange rate mechanisms used for each set of accounts to avoid costly mistakes.