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Opening a Foreign Currency Bank Account Online

By Rebecca Lake · May 22, 2022 · 6 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Opening a Foreign Currency Bank Account Online

A foreign currency bank account is typically a bank account that processes transactions made in currencies other than U.S. dollars. Businesses may use foreign currency bank accounts to conduct international transactions and support operations in other countries. It can be a major convenience because of its flexibility with currencies.

Individuals may also consider funding a bank account with foreign currency in certain situations, which we’ll cover in more detail in a moment. Read on to learn:

•   What a foreign currency account is

•   How to open a foreign currency account

•   The pros and cons of a foreign currency account

•   The fees associated with this kind of bank account.

What Is a Foreign Currency Account?

A foreign currency bank account is an account that’s designed to hold money denominated in foreign currencies. It may also be referred to as a multicurrency or borderless account. It is a simpler way to deal with regular deposits of foreign currencies.

The types of currencies accepted for deposit or used for withdrawals can be determined by the bank. Some of the currencies your bank may process include:

•   Australian dollars (AUD)

•   Canadian dollars (CAD)

•   Euros (EUR)

•   Great Britain pound sterling (GBP)

•   Japanese yen (JPY)

As mentioned, foreign currency accounts can be opened for business or personal reasons. Businesses that operate globally may require these accounts in order to send payments to vendors or receive payments from international clients.

You might open a foreign currency account for yourself, as an individual, in a few different circumstances. Perhaps you live or are working abroad, Or maybe you regularly make payments overseas or need to send money to friends and family internationally.

Depending on the financial institution, you may be able to open a bank account with foreign currency in order to:

•   Make deposits and withdrawals, similar to the way you might use a typical checking account, more conveniently

•   Earn interest on deposits

A foreign currency bank account that’s set up as a savings account might follow typical savings account rules. For example, the bank may limit you to six withdrawals from the account per month (though these regulations have largely been loosened since the COVID-19 pandemic). If that limit applies and you exceed it, the bank may impose an excess withdrawal fee. Keep in mind that any fees assessed for a foreign currency account may be processed in U.S. dollars.

Foreign currency accounts at FDIC member banks enjoy FDIC protection, up to the established limit. The FDIC insures banking customers up to $250,000 per depositor, per financial institution, per account ownership type. This may well reassure you about the safety of your funds.

One thing to note is that foreign currency bank accounts aren’t used for forex trading. If you’re interested in trading foreign currency as an investment, you’d need to open a separate brokerage account for that. There are a number of online brokerages that offer the option to trade forex alongside other investments, such as stocks and exchange-traded funds (ETFs).

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Typical Requirements to Apply for a Foreign Currency Bank Account

If you’re interested in how to open a foreign currency bank account, it’s important to know what documents you’ll need. That way, you can gather the necessary materials and speed through the application process. The specifics can vary from bank to bank but generally, you must:

•   Be of minimum age to open an account, typically 18 or 19

•   Have a valid, government-issued form of identification

•   Provide identifying information, including your name, address, date of birth and Social Security number

•   Meet minimum-deposit requirements

•   Provide proof of income and employment

The requirements aren’t that different from those for a foreigner opening an account in the U.S. Whether you can apply for a foreign currency bank account online or not will depend on the bank. Some banks do allow you to start the application online, while others require you to open an account over the phone or in-person at a branch. Check with yours to learn the exact protocol.

You may also need to already have at least one other account open with the bank before you can apply for a foreign currency account. If the bank imposes this requirement, you may also need to maintain a specific minimum balance in that account to qualify.

Pros of Foreign Currency Account

If you’re curious about foreign currency accounts, it may well be because you are tangled in some red tape as you try to bank in, say, both U.S. dollars and euros. A foreign currency bank account can help meet certain money management needs, like toggling back and forth between two kinds of currency. Let’s explore the pros of foreign currency accounts.

•   When you deposit funds into your account, you can hold it as multiple currencies, including leftover foreign currency from travel, in one place. You don’t have to exchange foreign currency before you can use it.

•   Being able to switch among different currencies could allow you to leverage the most favorable exchange rates.

•   You may be able to earn interest on your balances.

•   Multicurrency bank accounts can be used for personal or business purposes.

•   Sending payments or money in foreign currencies can be more convenient.

A foreign currency account could also come in handy if you travel. You can use a linked debit card to make purchases or withdraw cash in each country you visit, without having to get traveler’s checks from your bank.

So how do traveler’s checks work? If you’ve never used them, you might not know that these are paper financial instruments that can be used the same way you would a paper check or cash. Thanks to the convenience of credit cards and debit cards, however, travelers don’t need to rely on them as much to make payments when visiting destinations outside the U.S.

Cons of Foreign Currency Account

While a foreign currency bank account might be appropriate in some situations, there are a few drawbacks to consider. Specifically:

•   Your bank can charge you fees the same as you might pay for any other account.

•   Interest rates and APYs may be low.

•   Initial deposit requirements or minimum balance requirements may be on the higher end.

•   Changing currency rates can affect the value of the money in your account.

Another drawback of foreign currency accounts is that not all banks offer them. And some banks may only offer these accounts for businesses, not individuals.

What Are the Fees Associated With a Foreign Currency Account?

Foreign currency accounts can have fees the same as any other type of bank account. Depending on the bank, some of the fees you might pay include:

•   Monthly maintenance fees

•   Excess withdrawal fees (for savings accounts)

•   Overdraft fees

•   Foreign transaction fees

•   Currency conversion fees

When comparing foreign-currency bank accounts, take time to review the details thoroughly. It’s important to understand which currencies you can hold, which fees you might pay, and whether you’re required to maintain a minimum balance in the account. Once you’ve scoped those details out, see if the benefits of this kind of account will outweigh the fees. It could wind up being a good way to simplify your banking life if your financial life requires frequent foreign transactions.

The Takeaway

Foreign currency accounts can simplify money management if you regularly send or receive money in currencies other than U.S. dollars. Opening one of these multicurrency bank accounts is not that different from opening any other type of account. It can be a major convenience if your daily life involves receiving and/or sending funds overseas — and a good way to take control of your international financial life.

If you’re looking for checking and savings accounts for your everyday finances, try banking with SoFi. Our high-yield bank accounts, when opened with direct deposit, offer you all kinds of terrific perks, like a competitive APY and access to your paycheck up to two days early. You’ll also pay zero account fees.

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Can you open an account in foreign currency?

Generally, you can open a foreign currency bank account if your bank offers this kind of account and if you meet eligibility requirements. Foreign currency accounts may require higher minimum deposits than other types of bank accounts, which could make them better suited to high net-worth individuals.

Which US banks offer foreign currency accounts?

Some of the U.S. banks that offer foreign currency accounts at press time include Citi, Citizens Bank, HSBC, PNC Bank, and TIAA Bank. You can contact your current bank to find out if foreign currency accounts are available.

Should I open a foreign currency account?

Opening a foreign currency account could make sense if you regularly deal with banking transactions in foreign currencies. A multicurrency bank account could offer convenience and potentially save time when you need to send or receive money internationally.

SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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