In this video we're going to discuss foreign currency accounts. We're going to
look at what they are, when you should use them and different ones that are
available. Essentially a foreign currency account is similar to your everyday
account in Australian dollars, except that it holds a different currency for
you. So this might be US dollars or Pounds or many more. They're mainly
useful for businesses who are operating internationally. So what do you need to
know? Just like opening any account, opening a foreign currency account is
subject to you getting approved. It's also important to make yourself aware of
the rates, type of interest and rules surrounding overdrafts. For example some
banks will have a set interest rate, while others offer tiered interest. So it
changes depending on the amount you have in the account. A lot of these accounts
have minimum balances and sometimes these can be quite high. Some banks even
reserve the right to close your account if you don't maintain their minimum
balance. Finally the fees are really important, not only account keeping fees
but fees to receive money into the account, to transfer or withdraw out of
it and more. Foreign currency accounts are notoriously expensive, so it's really
important to become aware of the fees associated with the account you're
opening.
All big four banks offer foreign currency accounts as well as some private banks.
The first bank will look at is NAB. This account has no minimum balance
requirements and you can see on screen now the currencies that they offer.
NAB's standard account fees can apply when opening a foreign currency account with
them and between $10-30 can be charged if you're making an
international transfer. ANZ is next this account requires you to have at
least ten thousand Australian dollars in it. Or the equivalent in another
currency they have set currencies they offer and may consider others depending
on your situation. ANZ's fee structure is dependent on
the amount you have in the account. So there's no fee if your balance is more
than a hundred thousand Australian dollars.
Next up; Commonwealth Bank. Like NAB there is no minimum balance and there are more
set currencies available than what you'd find at ANZ. CBA will charge you
for depositing and withdrawing from your account but it's one of the only banks
will let you make withdrawals from the foreign currency account.
The last of the big four banks is Westpac, who again don't have a minimum
balance requirement and quite a substantial list of currencies they
offer. They don't charge you to maintain the account but they do charge you if
you're transacting from it, making a deposit of cash or cheque and all of
these fees definitely add up. In general Citibank is quite good when it comes to
foreign exchange products. They don't have a minimum balance on their foreign
currency account and you can see the currencies they offer here. The fees are
important though. There are fees to transfer out, to deposit cheques and even
to check on the status of an inbound transfer.
HSBC actually offer multiple foreign currency account types. They have a multi-currency account that allows
you to hold more than one currency and they have a foreign currency savings account.
Neither of these have a minimum balance. They also offer a term deposit. You can
see the currencies available with HSBC on the screen now. While there isn't any
account keeping fee. Fees do apply when making international transfers or if you
withdraw money from the term deposit early.
And finally Bank of Queensland, they have a very high minimum balance of $50,000
Australian dollars or $100,000 if you're making a term deposit. Their currency
list is also subject to change and they charge a lot of fees for holding the
account withdrawing, under $5,000AUD, depositing cheques and making payments.
There are a lot to be aware of here so this makes them the most expensive
option we've looked at.
Seeing as they're so expensive, what are some alternatives to opening a foreign
currency account? Money transfer specialists could help. These include
TransferWise, TorFX, OFX, XE and others. If you're only making and receiving
small or irregular payments, using a company like this might be in your best
interest.
Another great option is a product offered by TransferWise it's called the
Borderless Account. It's essentially a multi currency account but it allows you
to have local bank details for currencies such as US Dollars, Pounds,
Australian Dollars, Euros. This means you can make and receive payments in those
countries as if you had a local bank account There's more information about
this account in the description below.
Let's take one more look at the pros and cons of using these accounts. It helps
you avoid conversion fees if you're receiving or making a lot of payments in
a foreign currency. It helps you bill overseas customers in their local
currency and it takes the hassle out of sending and receiving frequent payments
in another currency. But there are high minimum balances that often need to be
maintained. It may only be worthwhile if you're depositing a really high amount
frequently and there are a lot of the fees associated with every aspect of the
account that definitely add up. If you'd like any more information about foreign
currency accounts, you can refer to the links below and leave any further
questions you have in the comments. If this was helpful please like this video and
subscribe to our Channel and we'd love to hear from you if you have any
questions about making international money transfers, exchanging currency or
anything just leave them in the comments below.