Multi-currency accounts and services are becoming popular in the last few years. If you are a traveller or a cross-border business owner, you may wish to read on to find out how this kind of account can help you with your transactions!
In the attempt to facilitate a cashless ecosystem, banks in Asia are offering multi-currency accounts to their account holders. Increasingly, there are more varieties of multi-currency accounts available with the rise of mobile payments and other cashless solutions.
Such accounts can range from basic multi-currency savings/current accounts to more complicated products like multi-currency FX trade accounts.
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Let’s start with the basic.
What Is A Multi-Currency Savings Account?
It is a savings account that allows the user to save a fixed number of local and foreign currencies. Similar to a wallet, this account is able to contain different currencies at any one time.
Users can choose to either purchase foreign currencies through the banks or deposit foreign currency cash into their accounts.
What Are The Benefits Of Using This Type Of Account?
- You can pay for your foreign transactions directly online without fussing over multiple conversion fees.
- You can receive foreign currency deposits in the same account.
- If you are constantly looking at the foreign exchange rates, you may just be able to change your foreign currency at the right time and minimise your foreign exchange risk. This foreign exchange risk incurs when the foreign exchange market is volatile. Thus, this difference in the exchange rate can be significant if you are planning to make a big investment overseas.
- It is a more secure method to make a purchase when you are travelling in overseas as compared to carrying bulks of cash.
- If you are stationed in overseas for a period of time, you may be able to link your major bank accounts together and avoid the hassle of managing multiple accounts under the same financial institution.
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What Should You Be Aware When Using A Multi-Currency Account?
- You may have to pay foreign ATM fees when you withdraw your cash from a non-designated bank in overseas.
- A number of banks have imposed a maintenance fee if your account balance is lower than the designated limit amount.
- “Free-free” transfers may not be applicable for transfers to overseas accounts. You should check out the transaction fees if you wish to transfer money to another foreign account.
- Your bank would usually designate a default currency for your transactions. Be sure that you check your account before you pay!
- The foreign exchange rate may be different from the rates you receive from a physical money changer.
Aspiring global citizens are likely to find this account useful as it improves the efficiency of their transactions. It is also relevant for those who wish to become regional entrepreneurs as it makes payments easier and safer across borders.
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A Rise In Multi-Currency Accounts?
The current wave of innovative financial services brings about the rise of marketplace banking. Instead of controlling all financial services, banks are becoming players in this marketplace for many services.
Despite this, there are regulated services that only trusted institutions are able to process. Hence, banks will continue to offer these core services and partner with selected financial technology (FinTech) companies to reduce gaps in their products.
One of these core businesses by banks is called “fund holdings”. This comprises of bank accounts, credit cards, debit cards and e-wallets in multi-currencies.
As the demand for global online transactions continues to rise, we are likely to see more conversions of personal savings accounts into multi-currency savings accounts in the next couple of years.
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