Multi-Currency Accounts Explained: How They Work and What to Compare
If you live, work or invest internationally, you may need to hold and move money in more than one currency. A multi-currency account allows you to store, send and convert different currencies from one account.
This guide explains:
- What a multi-currency account is
- How it works
- How it differs from a bank account
- What fees to compare
- Who typically uses one
What Is a Multi-Currency Account?
A multi-currency account is a payment account that lets you hold balances in multiple currencies. You can send and receive money in different currencies, and convert between currencies, often at better rates than you can get from a specialist FX provider or bank foreign exchange service.
Multi-currency accounts make it easy to send international transfers, for example if you need to pay bills, rent or mortgage payments in a different currency. You can also use a debit card linked to the accounts so you don’t need to pay transfer fees when you’re travelling abroad. Many multi-currency accounts are provided by digital financial companies rather than traditional banks, with companies such as Revolut and Wise leading the way.
How Multi-Currency Accounts Work
Most providers allow you to:
- Open an account online.
- Receive local account details (e.g. GBP, EUR, USD).
- Add funds in one currency.
- Convert at the provider’s exchange rate.
- Spend or transfer in another currency.
Some providers offer physical or virtual debit cards for international spending. These can be added to your phone wallet, or any other touch-pay device you might use, which makes paying for items really easy, and means you don’t need to take anything other than your smartphone or smartwatch, for example, with you when you go out.
Are Multi-Currency Accounts Banks?
Some multi-currency accounts are offered by banks, but not all. Others are operated by Electronic Money Institutions (EMIs), which are regulated companies that provide payment services, but are not ‘full’ banks. The main differences are:
- Banks usually offer deposit protection schemes.
- EMIs safeguard client funds but typically do not provide deposit guarantee protection.
Understanding this difference is important before holding large balances in an EMI instead of a bank.
What Fees Should You Compare?
When comparing costs
1. Foreign Exchange (FX) Markup
This is the percentage added to the wholesale exchange rate, which is where the provider makes it’s money. Even small differences can make a big difference over time. So, this is important to check.
2. Account Fees
Some accounts are free. Others offer paid tiers with added features. You should check what the different features offer and what you might pay for. For example, if you need to make a lot of transfers, you might find it cheaper to go up a tier and pay a one-off fee each month, than it costs to pay for transfers once you go over your monthly allowance.
3. ATM and Card Fees
International withdrawals may include charges. But these can sometimes be reduced by choosing a higher tier of your account. You might pay more as a monthly fee, but if you use an ATM or your card, if it has fees, often enough, this might be a way to save money.
4. Transfer Fees
Some providers charge fixed fees per transfer. Again, if you need to make a lot of transfers, it might be cheaper in the end to move to a higher tier for the account.
5. Weekend Pricing
Exchange rates may differ outside market hours, so bear this in mind if you need to make a transfer on a day over the weekend. Planning ahead could save you money.
Who Uses Multi-Currency Accounts?
Common users include:
- Expats earning in one currency and spending in another.
- Freelancers with international clients.
- Property owners managing overseas costs.
- Remote workers.
- Frequent travellers.
They are generally used for payments and transfers rather than savings or lending. But check what interest rates you will be offered. Sometimes you can earn more interest in a different currency if you need to hold money in one of the accounts.
Advantages
- Transparent FX pricing.
- Ability to hold multiple currencies.
- Lower international transfer costs than some banks.
- Digital access and app management.
Limitations
You need to be aware of some of the limitations of currency accounts, such as they are not usually covered by deposit guarantee schemes. This is because EMIs are not technically banks. But these accounts are ‘safeguarded’, in the sense that they are held separately to the EMIs business finances, so if they EMI failed, your money doesn’t go with it. If the bank behind the EMI that is holding your money fails, then you would not be protected. This is unlikely to happen, but is not impossible as we know from the 2008 financial crisis.
You may not be able to get a loan or an overdraft from a multi-currency provider, so if you need these services, you may be better off using a bank’s multi-currency account.
Remember, your exchange rates will still include a markup – this is how these institutions make some of their money. Also, you need to consider that the features available on these accounts varies by country, so check carefully to make sure you can get the services you need.
When Comparing Providers
Consider:
- Regulation and licensing – where is the institution regulated and licensed, and what protections do you have.
- Currency availability – if you want to exchange a rarely traded currency, you may not be able to at various times. This will be a rarity, and only an issue if you want to trade currencies in countries with sanctions, or restrictions.
- Minimum balance requirements – you may need to keep a set amount as a minimum in your account. Check before opening.
- Transfer speed – most transfers will now happen in a matter of seconds, especially with EMIs. Banks may take longer or charge more, so check these details if they matter to you.
- Customer support access – this may seem less important, but when something goes wrong and you need help, it becomes vital. Check customer reviews to make sure you’re likely to get a good experience. Remember though, historic comments may no longer be relevant, so consider the most recent reviews.
Frequently Asked Questions
Is a multi-currency account safe?
Providers are regulated and required to safeguard funds, but protection differs from traditional banks.
Can I receive my salary into one?
Often yes, if the provider offers local account details in your currency.
Is it cheaper than a bank?
In many cases, international transfer and FX costs are lower, but this depends on the provider and usage.
Disclosure:
CompareExpatMoney provides comparison information only. We may receive compensation from some providers listed. This does not affect how products are presented.
