Foreign currency accounts are essential, particularly for business owners that operate on an international level.
Such an account allows you to enjoy multiple benefits, including faster cross-border payments, real-time exchange rates, and lower transfer fees.
Read on to learn about how to open a foreign currency account and its benefits.
What is a foreign currency account?
A foreign currency account is a multi-currency borderless account that allows the account holder to send and receive payments in various currencies in a single account (i.e. same account details for all currencies). It can be maintained by a bank in the home country (onshore) or in a bank in another country (offshore).
Having such a bank account has a huge impact on how you manage your international finances and transactions.
It facilitates monetary and financial transactions by reducing currency exchange fees and simplifies the management of international transactions in different currencies.
Additionally, this type of account is not limited to just businesses and can be used to manage your personal finances as well.
Note: A foreign currencyaccount is often associated with a multi-currency account. You can learn more about it in this article.
How foreign currency accounts work
Foreign currency accounts allow you to make and receive payments in foreign currencies, which makes dealing with international transactions much easier and more convenient.
Such accounts allow you to easily switch between currencies and take advantage of strong currency rates.
Thus, you save time and money with a streamlined account by avoiding the high fees that come with conversions.
Which Banks offer foreign currency accounts?
Many leading international banks offer a foreign currency account through which you can deposit and withdraw money both online or at a branch.
In Hong Kong, the most popular banks include the following:
HSBC
For personal purpose
Opening an HSBC Personal foreign currency savings account allows you to trade in 10 currencies with a flexible, instant-access account.
You can access your money through your ATM card, at the branch, over the phone or online.
This account also provides you with detailed monthly statements showing all your transactions.
To be eligible for this account, you need to be 18+ years and hold an active HSBC current account.
For business purpose
Going with the HSBC Business Integrated account allows you to manage your foreign currency while paying absolutely no monthly fee (waived if the previous 3 months average total relationship balance* is HK$50,000 or above).
The HSBC Business Integrated Account associates savings, current, and time deposit accounts in 12 different currencies (including Hong Kong dollar, China renminbi, and Singapore dollar) under one account, and you can open a separate account for each business to store, send and receive money.
To be eligible for an HSBC Business Account, apart from the initial deposit of HKD10,000, you have to bring all necessary documentation to the account opening appointment. The documents required vary according to the type of enterprise, you may need to contact HSBC for more details.
if you're interested, We invite you to check out our blog post about opening an HSBC business account in Hong Kong.
Standard Chartered
For personal purpose
The Standard Chartered Personal foreign currency account enables you to enjoy unique benefits and get a maximum return on your investment in a choice of 8 major currencies, including AUD, CAD, CHF, EUR, GBP, JPY, NZD, and USD.
However, there is a minimum opening balance of 200 in any currency except Yen.
For business purpose
Choosing a Standard Chartered Integrated Deposits Account allows you to consolidate your current and savings accounts and gives you unique advantages in a selection of 11 major currencies (including Hong Kong Dollar, US Dollar, China Renminbi, Australian Dollar, Canadian Dollar, Swiss Franc, Euro, Pound Sterling, Japanese Yen, New Zealand Dollar and Singapore Dollar).
Thus, you can manage your international payment, save money in various currencies and withdraw money in a single account.
However, the minimum opening balance for HKD Savings Account is HKD1,000 and the Foreign Currency Savings Account is $200 in any currency except Yen, which is ¥20,000. Here we highlight everything you need to know to open a Business account at Standard Chartered.
Note: a visit to a Standard Chartered branch is necessary to complete the account opening after form submission.
Citibank
For both personal and business purposes
Opening a multi-currency account with Citibank gives you access to services such as foreign exchange trading, call deposit, and time deposit account. You can even select various tenors, currencies, and more depending on your financial needs.
You can make call deposits in 14 currencies, and trade in 12 major currencies (AUD, CAD, CHF, EUR, GBP, HKD, JPY, NZD, RMB, SGD, THB, USD).
Citibank also provides you a 24-hour Order Watching Services on Foreign Currency Transactions.
To be eligible for a Citibank multi-currency account, you must be above 18 years of age (or 16 and above for secondary account holders) and hold a Citibank current/business account.
In addition, depending on the multi-currency account you go for, a remote application is sometimes available.
How to open a foreign currency account
Opening a foreign currency account is quite similar to opening a typical bank account.
All you need to do is gather your identification documents and personal and financial information before applying online or visiting your local bank branch. If it's for business purposes, Banks may require additional documents like your company registration documents.
While there is an option to set up an account completely online depending on which bank you choose, some banks may require you to physically visit a branch.
If you require more information or have any questions regarding opening a foreign currency account, it would be best to contact a representative from the bank of your choice.
Why should you get a foreign currency account?
If you have an international lifestyle or do business involving clients or suppliers overseas, managing your finances through a foreign currency account will make your life easier.
In fact, for personal use, having a foreign currency account can be useful for traveling. It allows you to hold money in the local currency of the country you are visiting.
For example, if you're visiting England, you can hold money in pounds instead of dollars to avoid extra fees and charges.
For a multi-jurisdictional business, operating with a foreign currency account is essential as you regularly deal with payments and receivables in different currencies. With a foreign currency account, companies can pay their clients or suppliers in their local currency, which makes transactions easier and more convenient for them. This can help increase their sales. In addition, by managing different currencies in one place, businesses don't need to open local bank accounts in different countries.
A quick rundown of the upsides and downsides
Advantages to foreign currency accounts
➕ Holding multiple currencies
With a foreign currency account, you can hold multiple currencies, receive and send payments in different foreign currencies.
➕ Reduced Exchange Rate & Better Conversion Costs
The biggest benefit of using a foreign currency account is that it allows you to save on exchange rate fees preventing you from incurring any exchange rate loss that comes with regular bank transfers or wire transactions.
For example, suppose you or your business are receiving payments in HKD. In that case, you can use the same account to make HKD payments without converting the currency back into your local one.
Therefore, you save a lot by avoiding the high fees that come with conversions.
Neither do you have to worry about short-term currency fluctuations.
➕ Earn interest on your currencies
Many foreign currency accounts pay you interest on certain currencies with fixed deposit rates. Interest is typically offered in tiers, with better rates on larger balances.
➕ Easier International Transfers
You can make international payments and transfer money to and from your foreign currency account using online banking.
You can also make a payment from your current account to another company or person at your local branch.
➕ Leverage Exchange Rates
Most banks that provide foreign currency accounts allow you to switch among currencies.
Through this, you can take advantage of strong exchange rates, especially through large transactions.
Many banks use this as a unique selling point for foreign exchange accounts as this is unlikely to leverage exchange rates through a regular current account.
➕ Greater Convenience and efficiency
Foreign currency accounts are easy to open as all the currencies you deal in are managed in one place.
As a result, your monthly accounting is less complicated, and you no longer need to hold separate accounts with different banks making it even easier to track your income and expenses.
Additionally, it is much faster to make and receive international payments with a foreign currency account than with a regular current account which can be time-consuming.
Downsides to foreign currency accounts:
➖ Additional Fees & Charges
Just like any other bank account, you can be charged a fee for getting into an overdraft or for any special cash handling on some of your transactions.
These fees notably include monthly maintenance fees, a minimum initial deposit, conversion and FX fees, incoming and outgoing international payments fees, etc.
Therefore, when deciding which bank to open a foreign currency account with, you should choose the one with the lowest fees.
Insider tip: You may want to check if the financial institution has some offers. Sometimes according to the company, they may waive maintenance and other costs on your foreign currency accounts.
➖ High Minimum Balance Requirement
Some banks may have a requirement of a minimum daily balance.
However, a few international banks, such as HSBC, do not have any minimum account balance requirements.
Therefore, you should always be wary of banks with such balance and maintenance requirements.
➖ Lower Interest Rates
Compared to a standard savings account, foreign currency accounts have lower interest rates on all funds deposited.
Therefore, you may be better off using a regular bank account with a higher interest rate for funds deposited than a foreign currency account.
What should I consider when opening a foreign currency account?
1) Currency Choice
Any good foreign currency account provider will allow you to hold multiple current accounts in different currencies.
This should include all the major currencies.
If you are interested in making transactions with a minor currency that is less common, you should research more carefully and learn about your options in dealing with that currency.
2) Forex Fee & Charges
You should also be able to transfer money across the globe from any of your current accounts securely and without incurring expensive forex charges.
To make such cross-border transactions possible, your bank must support key international transfers, including SWIFT, as well as fee-free global transactions across accounts held with the same bank.
3) Overdraft Facilities
It can be extremely beneficial if your foreign currency account provider offers an interest-free overdraft facility to help you cover unforeseen expenses.
This way, you can avoid any risk and have some sense of security if you are ever facing any financial difficulty.
Depending on your circ*mstances, you should definitely consider opting for a bank that offers an overdraft facility with a foreign currency account.
4) Debit Cards
You should also ensure that your foreign currency account allows you to withdraw cash at multiple locations globally.
Additionally, having a debit card gives you access to other benefits, such as airport lounges.
Do Fintechs offer foreign currency accounts?
An alternative to traditional banks that offer foreign currency accounts are online payment solutions such as Statrys, Revolut, and Wise which provide a completely online/mobile banking experience.
Here are some neobank providers—but this is not an exhaustive list. We recommend you to check out some of the available neobanks in your region/location.
In the case of Hong Kong, there are many virtual banks with their own specificities. If you are interested in learning more, please check this article.
Revolut
Revolut, a UK-based fintech, offers multi-currency accounts for personal uses and business owners who need to manage international payments. You can receive, hold and exchange money in over 30 currencies around the world and configure as many sub-accounts in each currency as you need to operate your business.
However, every time you use your card abroad, you are charged two separate fees in addition to the cost of what you are purchasing.
One is a currency conversion fee, and the other is an administrative service fee.
However, with a Revolut, your money is exchanged at an interbank rate, and you don’t get charged either of these fees.
Additionally, you can withdraw your money from an ATM without having to pay any extra charges.
If you want to know how to open a Revolut account, you can check this article.
Wise
You can hold and trade in more than 50 currencies through the wise multi-currency account, including GBP, EUR, ESD, and AUD.
It is a borderless virtual account where you can convert your currencies at the real exchange rate in whatever currency you need whenever you need, all from the comfort of your home.
The Wise Debit Card allows you to spend money all over the world with low conversion fees and zero transaction fees.However, it is currently only available for multi-currency account-holder residents in the UK, US, Australia, New Zealand, Singapore, Malaysia, Japan, Switzerland, and EEA. So not yet available for Hong Kong residents.
Important notice: Revolut and Wise are not banks but companies that partner with banks to provide certain banking services. Thus, your money is only safeguarded and not covered by the Financial Services Compensation Scheme (FSCS) or another protection scheme that you would get with a bank account.
Opening a foreign currency account can be beneficial for your business and personal affairs if you regularly receive and make international payments.
Save on international business payments fees with Statrys
If you're a company incorporated in Hong Kong, Singapore or the BVI and want to make payments at better rates than banks offer, Statrys could be your solution for a foreign currency account.
With the Statrys business account, businesses can
- Receive and make payments in 11 major currencies
- Apply for a prepaid Mastercard for their team to manage expenses
- Enjoy FX fees as low as 0.1%, and more.
