How Can I Open a Foreign Currency Account?
If you run a business with an international presence or often face the need to send money to India or any country, a foreign currency account can enormously help you. One of the benefits of maintaining a foreign currency account is that you would not be going through conversion-related expenses.
Managing a foreign currency account is pretty much similar to a conventional account. However, different banks have diligence procedures to follow to proceed with a particular request to open.
The charges related to a foreign currency account are higher than a simple bank account due to the added workload. Most of the banks offer these accounts, but experts recommend that you should visit metropolitan branches as their processes will be swift given their familiarity.
Benefits of a Foreign Currency Account
If you are earning and spending in another currency, it becomes imminent for you to get a foreign currency account sooner or later. This will save you the added hustle of going through the currency conversion costs. Different banks offer variable facilities with their foreign currency accounts, but some general advantages that you can avail include:
- The facility to make foreign currency transactions
- Short-term cash flow difficulties can be averted
- Improves your readiness to deal with international suppliers and customers
- Simplified and economical collection of foreign currency payments
Let us suppose you choose HSBC to get a foreign currency account, the features that HSBC provides include:
- No monthly charges and no payment fee if the transaction is made to an HSBC branch anywhere in the world
- Live exchange rates with up to the minute changes for customer’s ease
- Easy account management with the facility to generate both immediate and recurring payments
Demerits of Foreign Currency Account
A foreign currency account can help in simplifying your business in multiple ways. Conversely, it can also cause strains on the business’s cash flows, i.e. the charges to maintain a foreign currency account are relatively higher than those of a conventional bank account. If you are new to foreign currency accounts, you should thoroughly understand the costs that might be involved, including any hidden charges.
According to a study conducted by TransferWise, a site used to send money abroad, most small and medium-sized businesses are not aware of the true magnitude of costs involved in foreign currency accounts. According to the research, 80% of the 565 decision-makers interviewed are oblivious of the expenses generated by the foreign currency accounts.
Foreign currency accounts might also not have overdraft facilities in some banks, such as HSBC. This can be troublesome if you are not aware of the funds available in your account before making a transaction.
There is also a cap on the amount that can be transferred in some cases, i.e. while using HSBC’s online, the account holder cannot move more than £50,000.
Although the estimated transaction time within EEA is one working day, it might take four or more working days to transfer the amount to a non-EEA country. This might result in difficulties or commitment issues with the third party.
Also, in HSBC’s case, to keep the account up and active, there should be two transfers per annum. If the account activity falls behind, then the account might go dormant. However, the customer can visit the branch or call the bank’s helpline to reactivate the account.
How to Apply?
If you want to get a foreign currency account in HSBC, you should:
- have an active HSBC current account
- be 18 years old or above