A multicurrency account is like a regular bank account, but instead of allowing you to hold, send and spend just one currency (e.g. GBP), you are able to split your balance across multiple currencies at the same time.
With a multicurrency account, you don’t have to open and hold multiple bank accounts across different countries. Instead, all of your different currencies are available in one place, allowing you to send or receive money, or send money abroad without having to pay fees required to convert currencies.
Whether you are a freelancer getting paid abroad or a traveller/expat looking for ways to reduce the cost of spending money abroad, multicurrency accounts have a number of benefits. We discuss these in more detail below.
What are conversion fees?
Conversion fees refer to the fees added to purchases that are made in another country outside of where your credit or debit card is issued. For example if you make a purchase at a store overseas, or if you buy online from a foreign website.
Fees also apply when you are sending money abroad to another country with a different currency. This can show up in two forms when sending money through a money transfer provider or bank – a flat fee added to the cost of the transfer, or a markup on the exchange rate.
For the latter, each pair of currencies being converted (e.g. pounds to euros) has a mid-market rate – the midpoint between buying and selling prices in the wholesale market. Money transfer providers will often add an additional amount on top of this rate when you are exchanging currencies.
Multicurrency accounts don’t make conversions free, but they reduce how often you need to make a conversion between currencies. For example, if you are paid or receive a certain currency (e.g. euros), you can keep the money as euros, whereas with a standard UK bank account those euros would be converted to GBP and then
Who might want to use a multicurrency account?
There are a number of different reasons you might want to use a multicurrency account, particularly if you fit into the following categories:
- Frequent travellers: People who go abroad regularly for business or pleasure, or to visit others living abroad, can use multicurrency accounts to help reduce conversion fees.
- Expats: You may live in one country, but still have income, savings or bills in another country. Being able to hold both currencies and convert only when you need to can be very useful, particularly useful in the early months abroad before you have a local bank account set up.
- Freelancers and remote workers: If you’re being paid by a company in another country, local account details can allow you to receive payments as a domestic transfer and keep earnings in the original currency until you choose to convert.
- Overseas property owners: Paying mortgages, maintenance costs or local taxes abroad may require a conversion, or you may be receiving money from tenants abroad – a multicurrency account can help simplify payments for this.
- Retirees living abroad: Some retirees living abroad might choose to have their pension paid in their home currency and use a different currency to pay local living fees – having both in one account allows you to choose when you convert.
- People supporting family overseas: If you are sending money to relatives in another country, you may find it easier to hold the same currencies as the recipient and this also enables you to send larger amounts less frequently without accruing large fees.
- Small businesses: If you have a business that needs to invoice customers internationally or pay overseas suppliers or staff, your business can save money on conversion by holding multiple currencies.
What are the key advantages of a multicurrency account?
To summarise, multicurrency accounts offer the following benefits:
- Fewer conversions: You can hold the money in the same currency you receive it in and spend in that currency – with the choice of when and how you convert.
- Cheaper payments in: From the other side, multicurrency accounts often feature international bank account numbers that allow people to pay you as if it were a domestic transfer, reducing their fees for sending.
- No foreign spending fees: If you spend through a card attached to a multicurrency account, you can avoid foreign transaction fees that standard cards may charge.
- One account for your currencies: By keeping everything all in one place, you don’t need to open separate foreign.
Save on conversion fees through FXcompared
Multicurrency accounts can be incredibly useful tools for saving money if you regularly earn, spend or save in other currencies. However, conversion between currencies itself is not free.
When you do need to send money abroad, comparing between different money transfer providers can make a huge difference to the cost you end up paying.
With FXcompared, you can compare the cost of sending money abroad across well-known, trusted providers. Check out our free comparison tool and find out what to look out for when comparing providers in our helpful guide.
