Have frequent business trips become a part of your schedule? Or do you often send money overseas to your loved ones? If you’re any of the above, opening a multi-currency account may be the solution to your complicated banking services woes.
Remember the days when credit cards used to be a thing of the future? Now, though, the funds in our bank accounts are so readily available. Making payments just requires a tap of your credit card, and withdrawing cash is so simple with all the ATM machines dotted all across the island.
But when you’re in a different country, everything changes. Though your credit cards are still functional, you’ll need to pay hefty transaction and conversion fees. Withdrawing money can also be cumbersome since queueing at money changers can be time-consuming.
Especially if you’re overseas long-term, you’ll need your funds to be at your fingertips to save time. The solution? A multi-currency account. These accounts are not just for frequent travellers — if you’re a business owner who deals with international transactions in different currencies, this might just be your solution to optimising your banking services too.
Here, we deep-dive into the pros and cons of multi-currency accounts to help you decide if opening one is worth it, according to your lifestyle.
What is a multi-currency account?
As its name suggests, a multi-currency account is a single bank account that allows you to hold multiple currencies all at once. Not only does it just hold multiple currencies, but it also allows you to deposit and withdraw money in different currencies, and make transactions to various accounts in different currencies. Think of it as your normal bank account with all its functions, just that it deals with multiple currencies.
Compared to a normal bank account, transactional charges are usually comparatively lower, making it extremely worthwhile for individuals who travel a lot or often make multiple transactions in different currencies.
Multi-currency accounts belong to two different categories: traditional multi-currency accounts and digital multi-currency accounts. The traditional accounts are those that are offered by your usual banks like DBS or Citibank and work as a standard savings account, while your digital accounts are offered by hybrid digital banking solution companies such as Instarem, Wise and YouTrip that work similarly to a debit card.
Pros of a multi-currency account
Hold more than one currency in your account
The main reason why you should open a multi-currency account? To hold multiple currencies like SGD, USD, GBP, EUR, HKD, JPY and more in a single bank account.
If you’re travelling abroad, you can store your funds in a specific currency that you’ll need. If you’re a business owner, you can seamlessly make international transfers with your clients from all over the world in your preferred currency. If you’re just an avid shopper, you can take advantage of the cheaper prices when you shop on international sites with their home currency.
Make instant transfers or payments abroad
Imagine travelling overseas for business and having to locate your bank’s ATM machines that might not be as accessible as those in Singapore. Because of this, you’ll have to bring stacks of cash everywhere with you just to avoid the snaking queues at money changers.
But with a multi-currency account, you’ll be able to access your funds in their local currency literally at the tip of your fingers. Most multi-currency accounts offer a debit card for you to seamlessly make payments, withdraw money and even transfer allowance money in SGD to your kids back at home.
When you’re in a foreign land after a long day of back-to-back business meetings, the last thing that you want is to go through the hassle of accessing complicated banking services just to have enough money for a meal or taking the train back to your hotel. With a multi-currency account, you enjoy the utmost convenience for all your overseas banking needs.
Cheaper conversion and exchange fees
You might think a normal savings account will be enough when you want to exchange your currencies for your yearly business trips or when you want to send money to your loved ones, but what you don’t realise are the exchange and conversion fees setting you back. Though they may seem relatively insignificant, these fees definitely add up in the long term.
Multi-currency accounts usually have cheaper fees or no foreign exchange fees at all. This helps you save a good sum of money in the long run, especially if you make multiple foreign transactions per day.
Cons of a multi-currency account
Additional fees or transaction charges
Though most banks offer cheaper conversion fees when it comes to opening a multi-currency account, you’ll still have to fork out those fees, be it for transacting or to open an account.
There may also be an annual fee for the maintenance of the account. And as mentioned above, though they may not seem significant, they do add up over time.
Different banks and banking solution companies offer different perks and charges for their own accounts, so it’s best you do your due research before opening one. Savings on each transaction do go a long way.
High minimum balance requirement
Though not all accounts have this, some accounts may have a really high minimum balance requirement that you’ll have to meet. They might even charge you a fall-below fee if the amount is less than the required balance.
While it may seem like there’s no harm in keeping a large balance in your account, the money would just be sitting there, when you could free it up to invest or store in another wealth accumulation vehicle to earn interest and make your money work harder for you.
Interest rates may not be as high as savings accounts
Another drawback of a multi-currency savings account is the interest rate that you’ll earn. Since the main focus is on the convenience of holding multiple currencies at once in a consolidated account, you can’t expect sky-high interest rates like those of a typical savings account.
However, some savings accounts do offer a multi-currency feature, like the Standard Chartered Bonus$aver account that offers up to 2.38% p.a.
Do I need a multi-currency account?
If you’re someone who travels a lot, sends and receives international payments often, or if you are a business owner who sells your products and services online across international borders or regularly sends money to your loved ones in different countries, then a multi-currency account might just be the solution to the seamless banking experience you seek.
Avid shoppers can also make use of their multi-currency accounts to snag deals or lower prices if they pay in the site’s preferred home currency.
If the above doesn’t apply to you, then you’d be better off opening a savings account instead to take advantage of the higher interest rates. The occasional leisure holidays won’t inconvenience you much either, as you can simply pay with your credit card or bring enough cash along for short trips.
What are other alternatives?
Aside from most credit cards that allow you to pay overseas as well, you can make use of money transfer services that let you send money to your loved ones in other countries without a multi-currency account.
Most of these services allow you to either send money online or in-person with your existing bank account. They also offer the same convenience and do not require you to open a new bank account just to send money.
Read these next:
Ultimate Guide To Digital Multi-Currency Accounts (2022)
Why Multi-Currency Accounts Are Essential
Credit Card Or Multi-Currency Card For Overseas Spending?
Differences Between Bank Account Types You Need To Know
10 Best Money Remittance / Money Transfer Services In Singapore
SingX Money Transfer Review: Low Fees, Upfront Pricing & Speedy Transfers
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Wise (Formerly TransferWise) Review – How It Works, Fees, Rates, Debit Card
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Ultimate Guide To Digital Multi-Currency Accounts: Revolut vs YouTrip vs Instarem vs Wise vs Wirex (2023)