Every day dawns upon people with a new way to connect worldwide. Galloping technological advancements allow people to stay associated with their loved ones with little regard for the distances and physical barriers between them. This has also enabled them to make international money transfers swiftly and securely compared with the past. Global migration trends aren’t new, and the Philippines, with over 12 million diasporas living abroad, is one of the top countries whose people prefer working in foreign lands. Like the overseas Filipino workers (OFWs) send money to Philippines for financial support, millions of others also do the same from overseas. So, these expatriates have plenty of options for global money transfers, often confusing them with what to choose. In this blog, you’ll learn whether you should have a Multi-Currency Account.
Knowing about different types of bank accounts is essential if you send money home from overseas. For instance, if you are a Filipino living in Canada, you earn Canadian dollars and have to send money to the Philippines in its local Peso. You will have to send the Canadian dollar, converting it into the local currency of the Philippines to let your beneficiaries receive the funds. You can do this properly only if you have the correct account and the right services for cross-border transactions that offer reasonable exchange rates.
A multi-currency account can streamline your money sending and receiving worldwide, giving you additional advantages. Here is all you must know about a multi-currency account, its functions and other related information.
What is a multi-currency account?
Understanding a multi-currency account is the same as its title. It is a bank account that allows the holder to send, receive and hold multiple currencies simultaneously in the same account. It does not involve the fatigue of having different accounts for different currencies and maintaining each one separately. A multi-currency account enables the holder to use different currencies, using the same account number for different currency types.
Many financial institutions allow the account holders to open and maintain a multi-currency account and use many currencies such as the Pound Sterling, USD, Chinese Yuan and Japanese yen, etc.
Operating a multi-currency account
There is little difference between the operations of a multi-currency account and a standard bank account. Of course, the outlook of the services will vary from bank to bank or where you open the account, but the everyday banking operations remain more or less the same. These are:
- A multi-currency account enables you to withdraw money like a regular account
- You can also send and receive money and payments
- You can have access to your money in a multi-currency account through cheques and electronic transfers
- Interest earning on the total amount. It depends on whose services you use.
- You will have to pay the account opening fee, withdrawal charges and transfer fee, etc. the amount of these charges will vary depending on the institution whose services you are using.
These are some of the services you can avail of with a multi-currency account. However, do not expect to get some additional and extra services for this account. As mentioned above, a multi-currency account’s core functions remain the same as a standard bank account.
Need a multi-currency account?
Before deciding to open a multi-currency account, determine your needs and requirements. Not everyone needs a multi-currency account. You can begin by making a list of services your standard bank account is not providing you and the services you need for a multi-currency account.
For your convenience, here is a quick and easy way to assess whether you need such an account. Try answering the following answers.
- Do you send and receive money internationally?
- Do you run a business that sells goods and services online globally?
- Do you happen to get your operations done by freelancers hired from other countries offering online services and requiring online payments?
- Are you an expatriate remitting money to your loved ones in other countries?
- Do you work internationally?
You will need a multi-currency account if the answers to these questions are affirmative.
Let’s now look at some of the benefits of using a multi-currency bank account.
Benefits of a multi-currency account
Following are the benefits of having such an account.
Maintain a single bank account
One of the enormous benefits of having a multi-currency account is maintaining just one account and communicating the same to whoever you will. Of course, carrying just one account for different currencies instead of one account separately for each currency is easy to remember and convenient to deal with.
Easy reconciliation and accounting
It is easy and less time-consuming to reconcile the account statement after every transaction you make. The only difference is the flow of currencies. And since the account is single, dealing in multiple currencies, reconciling it and doing the detailed accounting of the same becomes a lot easier.
Save commissions and conversion fees.
Suppose you have an account dealing with your local currency and receive a payment in a foreign currency. In that case, the bank will first convert the foreign currency you have received into the local one before transferring.
It involves two-way expenses. One is the bank’s fee, and the second will deduct a substantial amount as its commission during conversion. Therefore, due to the said deductions, you may receive only a paltry amount of what you expected to obtain from the foreign payments. But, with a multi-currency account, you will not have to pay the conversion fee and the exchange commission. There, you receive the foreign currency directly into your bank account, similar to local currency movement.
Get the best exchange rates.
A multi-currency account allows you to convert foreign currency, or any of them, at the right time when the exchange rates are suitable and high in the international currency exchange market.
A multi-currency account is cost-effective.
Banks charge their clients for the services they provide. Therefore, if you have many bank accounts for different currencies, you will incur many expenses for the services you avail of for other accounts. But, with a multi-currency account, all the expenses narrow down to only one account and one bank.
These are some of the benefits of having a multi-currency account. But have you ever thought about the alternatives to having such an account?
Think about it if you haven’t yet.
Alternative to multi-currency account
Expatriates from underdeveloped countries such as the Philippines travel to developed countries, find employment, and then send money to Philippines online. However, a multi-currency account lets you transfer different currencies through one channel. But some money transfer services, like ACE Money Transfer operating in over 100 countries worldwide, have made it even easier to transfer funds from one country to another quickly and conveniently.
It can save you from the hazards of showing up in a bank, providing the necessary documentation to open an account, and then waiting several days to get it operational.
Having a multi-currency account is beneficial in the ways elaborated above. But only if the answers to the questions asked in the preceding paragraphs are affirmative. Otherwise, transferring money with an international money transfer app can be the best option to move your funds internationally.
Technology brings more and more ease to life and how we conduct ourselves. The only requirement to keep up with the changing and ever-evolving technologies is to understand it better, transform your behaviour, stay on top of it, and act accordingly.