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> Foreign Currency Bank Account - UK Guide
In a nutshell
A bank account that is based on a foreign currency rather than in UK sterling.
Best Bank Account For
People that want to spread their money across different currencies, expatriates, people that live abroad for part of the year, frequent travellers, people looking to move abroad, people with offshore banking needs. Businesses can also benefit from a foreign currency bank account if they work on an international basis.
If you hold a bank account in a foreign currency then you may find that is much easier to manage your money whilst you are travelling abroad - either from a business or a personal perspective. These accounts are set up in such a way that you don't need to worry about exchange rates and currency conversion costs. In many cases you won't be charged extra for accessing your money whilst abroad. For example, your account may include free ATM withdrawal and credit card usage for example. You can withdraw money from an ATM abroad with a sterling account but this will invariably incur charges of some sort or other. Some foreign currency banks also offer the facility to open multi currency accounts so you can make the most of changes in the currency markets, for example.
What to look out for
Not all foreign currency accounts will give you a full range of traditional banking services and you may not be able to do everything you want with this kind of account.
It may be worth your while taking a look at offshore foreign currency accounts to see if you can benefit from their advantages as well. These kinds of accounts can give you specific tax advantages which could help you maximise your return on investment - but this is a decision that needs careful (and preferably) expert advice. It's a good idea to shop around to find the account that suits you best - things to look out for include free banking, interest paid on your credit balance(s) and whether you can use a special credit and/or debit card on the account. Any/all of these services will save you money and make your overall money management that bit easier. In any case, you should be certainly able to find a foreign currency account that will not charge you for currency conversions etc.
Not everybody will qualify for a foreign currency account - the banks that offer this kind of account can be very particular about their customers. In many cases, you'll be expected to open the account with quite high deposits and you may actually be penalised if your balance goes below a certain level - i.e. your interest rates could drop or cease and you may have to pay account management fees. In some cases, you'll only earn interest on amounts in excess of a relatively high level in any case. Some foreign currency bank accounts charge regular administration fees.
You could look at standard sterling accounts as an alternative - they'll offer the same services more or less but won't give the cost advantages that foreign currency accounts offer for currency conversion etc.