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A multicurrency account is a bank account that allows you to spend, receive and hold currencies from different countries. It can be a benefit for global travelers or people who do a lot of business internationally and are often exchanging money from one country to another. If you're curious whether it's a good or bad idea for you, keep reading.
What Is a Multicurrency Account?
Sometimes referred to as a foreign currency account, a multicurrency account is designed for individuals and businesses to have currencies from different countries in one bank account. From that account, you or a business can send, receive and withdraw money, just like a regular bank account but in multiple currencies.
For instance, if you live in New York City but you're on a business trip in Sweden, you could use your phone or debit card to buy a business client lunch with Swedish krona—without first exchanging dollars for krona. Granted, you can do that with a credit card, but it can get expensive if it comes with foreign transaction fees.
Multicurrency accounts generally won't work with every currency on the globe—it depends on the financial institution offering the account as to what monies you can carry in the account—but your multicurrency account may be able to hold numerous currencies, including the:
- U.S. dollar
- Canadian dollar
- Euro
- Swiss franc
- Australian dollar
- British pound
- Hong Kong dollar
- Japanese yen
- Indian rupee
- Omani rial
- Chinese renminbi
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Pros and Cons of a Multicurrency Account
There are numerous pluses and minuses to having a multicurrency account, and not all of these accounts are built the same way. Before opening an account, you'll want to compare financial institutions for features such as conversion rates to find the best option. Also, some multicurrency accounts have debit cards, while others don't.
Pros
- Lower exchange rates: You'll still pay fees for exchanging money from one currency to the next, but the cost of conversion is often lower than what would be found with a conventional bank.
- Simplicity: It's easier to have one bank account with multiple currencies than having accounts in different countries, or continually exchanging your currency for different ones.
- Perks: Some multicurrency accounts may come with features that a regular bank account won't have, such as earning interest on balances in different currencies.
Cons
- Lack of fraud protection: Credit cards typically protect consumers from fraud; multicurrency accounts may not.
- Possible lack of protection from a financial crisis: Not all companies that provide multicurrency checking accounts are licensed banks, so you may not get the protection you need if your financial institution goes out of business.
- Fees: There may be monthly maintenance charges that negate the savings you'll get from a multicurrency account. You also may be charged for using ATMs outside the bank's network, withdrawing too much money or making too many withdrawals.
- Balance requirements: There may be a high minimum balance required for the account, which could be tough to maintain if you're using the account for frequent purchases.
Do I Need a Multicurrency Account?
Not every consumer needs a multicurrency account. If you rarely—or never—travel abroad, it's unlikely you'll get much use out of a multicurrency checking account, for example.
Still, there are several types of consumers who may find a multicurrency account beneficial:
- International exchange students
- Expatriates
- Frequent international business travelers
If you have family in another country and you often send them money, it may be beneficial to have a multicurrency account.
Other Ways to Make International Payments
If you do occasionally make international payments, but not enough to justify opening a multicurrency account, you have several options.
There may be fees or limits on the amount of money you can send, but generally if you're thinking of transferring money to another country, you may want to try:
- Your bank: You will likely have several options for sending money to another country, such as an international wire transfer, though these may come with extra fees.
- A company that specializes in sending money: Companies such as Western Union, PayPal or Wise are convenient options. Not all peer-to-peer payment apps will do it internationally; popular brands Zelle and Venmo do not, for instance.
- Your post office: You can send a money order and pay with cash, a debit card or a traveler's check. You'll pay whatever you are giving to your family member, friend or associate—generally up to $700—as well as an issuing fee of $49.65 and a processing fee based on the country. The post office will then deliver it.
The Bottom Line
If you often do international transfers and find the exchange rate expensive, you might want to look into a multicurrency bank account and try to shave off some of the expense of transferring money.
Keeping tabs on your credit while you travel—especially for long periods of time—is important to protect yourself from identity theft and unauthorized charges. Sign up for free credit monitoring from Experian to be notified of any changes to your credit report while you're away.