Deal in Multiple Currencies? Get a Foreign Currency Account Todayby Samantha Kennedy Consultant, writer
A foreign currency account can revitalise your international transactions. With so many benefits, it is becoming a preferred choice for people dealing in multiple currencies. This post examines some of the reasons that make it a prudent choice.
Foreign currency accounts or FCA is a go-to account for individuals indulging in overseas transactions. FCA offers one to set up an account holding foreign currency. Such an account can be maintained by a bank in your native country or a foreign country as well. If you live overseas and send money home or you deal with multiple currencies because of your business, then an FCA is a must for you.
Here's how a foreign currency or alternatively known as a borderless or a multi-currency account can benefit such individuals:
● Provision to Hold Multiple Currencies: If your business is expanded or you need to deal in multiple currencies then these accounts come to your aid. Typically, banks allow you to deal with a few currencies. This way, you are saved from the task of converting your currencies every time you send or receive money.
● Seamless International Transactions: Since multi-currency accounts empower you to send or receive money in foreign currencies, these accounts come with no overseas transaction charges as well. You can send your money home or pay for any overseas transaction without paying any international transaction charges.
● The Exchange Rate is your Aide: Exchange rates can eat up a great chunk of your hard-earned money. When you operate your international transactions using a borderless account, you can instead leverage exchange rates to your own benefit. Banks allow you to switch among currencies in your multi-currency account. So whenever exchange rates are at a stronger tide, you can convert all your foreign currencies to your native currency. This minimises any loss that occurs and instead adds up to your profits.
● No Conversion Cost: Conversion costs can quickly drain your profits if you deal with multiple currencies. However, with a borderless account, you do not have to fret about conversion costs at all. Instead, just like normal accounts, you avail of interest benefits on your foreign currency account as well. The larger is your account balance; the more interest can you earn on your foreign currency. Also, with exchange rates at your side, you can convert the interest earned into your native currency.
Let's check out how these benefits can propel your business with the help of an example:
Anuj is an iron goods manufacturer who imports iron ore from Australia. Apart from the domestic supply in his native country India, he exports his products to South Africa as well. This leads to Anuj buying his raw materials in Australian Dollars and selling his goods in South African Rand.
Operating from a regular savings or current account, Anuj not only has to convert his money every time he buys or sells goods but also has to endure the effect of exchange rates. Also, he pays overseas charges every time he executes a foreign transaction.
However, if Anuj gets a borderless account, then Anuj can deal with Australian Dollars and South African Rand from a similar account only. He does not need to convert his currency for every transaction, and neither he has to pay for overseas charges. Plus, whenever exchange rates are favourable, Anuj can convert his money into his native currency, which is Indian Rupee.
FCA: Extremely Time-efficient Way to Manage International Transactions
Foreign currency accounts not only make the cost of your overseas transactions effective but they also help you in saving crucial time since there is no need to convert funds. Also, the provision to hold multiple currencies avoids the hassles of setting up different accounts for various currencies. And this is just the tip of the iceberg. Based on your bank, you can avail of multiple unique benefits on your multi-currency account, coherent to your transactions.
Created on Sep 30th 2020 01:29. Viewed 316 times.