How Does an International Account Work?

An international bank account, also known as a foreign currency account or multi-currency account, is an account in which you can send and receive money in different currencies. The obvious advantage is you can have centralized control over all your transactions and can stay on top of all that is happening with your money.

So, how can you transfer money so seamlessly across currencies with this account? How does it all work?

Let’s find out.

How does an international account work?

A foreign currency account is nothing but a standard bank account in which you can receive, pay, withdraw, and access your money at any time. You can even earn a certain amount of interest on the balance, depending on the financial institution.

What differentiates this account is that you can do all these activities not just in local currency, but also in other foreign currencies. This way, you don’t need multiple accounts across countries, if you regularly deal in foreign transactions. This translates to savings in the maintenance fees of multiple accounts, as you only pay for one and handle all currencies through it.

Depending on your bank and the account offers, you may be able to save on transaction costs as well.

Now that you know how an international account works, do you even need it in the first place?

Do you need a foreign currency account?

A foreign currency account is not for everyone. If you’re someone who works and earns money in the local currency, you don’t really need a foreign currency account.

Typically, people who fall into one or more categories mentioned below are the ones who would need a foreign account.

• Someone who receives and sends money to relatives in a foreign country.
• A global businessman who transacts business in foreign currency with traders, suppliers, and customers located in foreign countries.
• Freelancers and consultants who work for clients located in other countries.
• Businesses that employ freelancers in other countries.
• Anyone who deals with one or more foreign currencies for personal or professional reasons.

If you do any of the above activities, you need a foreign currency account. In all other cases, a local account would do.

How to choose a multi-currency account?

Now, let’s say you decide to open a multi-currency account. How can you choose the one that’s appropriate for you?

Here are some reasons to consider before zeroing in on a multi-currency account for your operations.

Foreign exchange costs

One of the key considerations is the foreign exchange costs. All banks have a margin rate over the interbank exchange rate depending on the currency. That is fairly common. However, some banks even have hidden processing rates and this is what you should watch out for. Steer away from banks that don’t offer a transparent exchange process.

Quick processing

In general, choose banks that process your money quickly, typically in 1-2 days. If your bank takes more than that, look for other options.

Wide range of currencies

Your bank must process a wide range of currencies, at least the popular ones and the currencies that you’re likely to deal with it.

We hope all this information helps you to make the most of a foreign currency account.