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.