*Article contributed by Justin Rampono.
As an expat or a person who lives outside your native country temporarily for retirement vacation, work, or business, money should be accessible through the right banking arrangements. That’s why you need to choose the best foreign currency account from a trusted and reputable bank with a solid capital base, and one that complies with international regulations.
In this post, you’ll learn the important considerations when choosing a foreign currency account.
Multiple Currencies
If you want to open an account that allows the opening of multiple currencies easy and quick, you might want to consider a borderless foreign currency account, such as TransferWise Borderless Account. With this type of account, you can have a local bank account in multiple currencies in different countries.
Here are the benefits of having a foreign currency account allowing multiple currencies:
- Regulated and reliable
- Competitive rates
- High level of security or protection (with encryption) between transfers
- Charge a fee only when you move money
- No setup fees
- No monthly or recurring charges
Learn more about borderless accounts by checking this video:
Requirements
When opening an individual foreign currency account, look for a bank that requires minimum eligibility requirements. But of course, make sure that the bank is trustworthy and has no history of lousy expat experience. It’s worth checking online communities discussing this topic.
There are foreign currency accounts without limits on deposits, but some banks have a strict policy for larger deposits. You might be required to show evidence of your source of funds, like a payslip or letter employment certificate showing your salary. This requirement is obtained to ensure that you’re not, in any means, engaged in fraudulent or criminal activities.
Here are the basic requirements:
- Business visa (with at least 70 days duration)
- A valid passport
- Letter from your employer
- Passport photos
Once you have all the requirements or documents ready, the entire process of opening a foreign currency account takes 30 minutes to an hour.
Limitations
While you want to spend your money wisely, it’s also important to choose a currency that allows you to make deposits or withdrawals in person at any branch, including ATMs, for a smoother and easier transaction. Also, choose one without limitations on the amount of deposits or withdrawals. There are ATM cards that cannot be used overseas with limitations on international transfers.
Most banks have no guaranteed deposits because central bank rules generally prohibit banking institutions from paying interest to foreigners. It means that you can’t expect annual interest on savings, or a term deposit earning a certain percentage per year.
Here are the other limitations of some foreign currency accounts:
- Have more restrictions
- Withdrawals should be in person
- Better suited to store cash and transfer money
- Not all branches are authorized or licensed to handle foreign currencies
- Some banks don’t allow transferring money to a foreign currency account at a different bank
- Some banking institutions refuse to move money to banks other than the ones belonging to the same network
Keeping Your Savings in US Dollars
You can choose to open a foreign currency account and a US dollar account at the same time. By doing so, you can keep your savings in US dollars, and you can deposit enough in the foreign currency account to cover your living expenses.
Charges
While living abroad is cheaper for many people, you also need to be aware of bank fees and charges. Foreign currency accounts generally don’t have a setup fee or recurring monthly fees because central banks restrict what banks can charge for a wide range of services. Also, banks cannot charge for deposits or withdrawals, either through an ATM or in person, provided you’re using your bank’s ATM.
Here are the charges associated with foreign currency accounts:
- If you use another bank’s ATM, you’ll be charged a small fee, which is usually around 0.1 percent.
- You’ll be charged if you deposit cash into your foreign currency account. The charge ranges from 0.3 to 0.6 percent.
- A flat fee for withdrawals may also apply.
- A cable fee (usually a minimum of $20) applies if your employer pays you or transfers money from one bank branch to another, and it may take at least three days to show on your account.
- Outbound and inbound remittances have charges, too, usually at 0.125 percent.
Conclusion
Banking and budgeting are a lot easier if you have the best foreign currency account. Look for something reliable, flexible, and one with minimum charges. Of course, you have to choose a trusted and reputable bank or foreign currency account provider that best suits your needs. Now that you know what to look for, you’re more confident with your finances in the country you’re currently residing.
Bio Description: Justin Rampono is the founder of The Currency Shop, an exchange rate comparison site.