Multi-currency accounts

Introduction

If you move a lot between different countries (either for work or because it is your lifestyle), you will often need to deal with local banking. Unfortunately, it is not always easy or even possible to open a new bank account, when you arrive in a new country. In particular, if you are not moving permanently you might not be able to just go into a local branch and open a bank account. Note, however, that policies between different banks (and sometimes even between branches of the same bank) differ, so you should always inform yourself beforehand. For example, persistent tourists visiting the US may be able to open a bank account and even credit cards.

While having a local bank account without any fees is often the preferred choice to truly bank locally, there exists an increasing number of services of multi-currency accounts that give access to local banking. Let us discuss this crucial difference:

• WHAT WE DO NOT WANT: multi-currency accounts WITHOUT local banking. Many banks in your home country may offer foreign currency accounts, but those are just local accounts in your home country that hold foreign currency. Say, you opened a USD account with a German bank, this bank account will not be connected to the US banking system through their local domestic transfers. If you need to send USD from this account to the account of an American friend, you would still need to deal with an international SWIFT transfer incurring high (and often unpredictable) fees. Moreover, these type of transfers will take some time and they are often not accepted for local payments. For example, you will not be able to pay your US credit card bill by sending an international transfer from your German bank, even if you have German account holding USD.

• WHAT WE WANT: multi-currency accounts WITH local banking. Instead, there are a few international services that offer you the convenience of having several local bank accounts in different countries, so that you can fully participate in local banking (sometimes with restrictions). For this, it is important that these service truly offer local account details in your name, rather than just them having a local bank account in their own name. Moreover, it is imperative that this local account is fully connected to the local banking system, so that you can perform domestic transfers (which are free / much cheaper than international SWIFT transfers).

Having multi-currency accounts with local banking is particularly convenient, when you move to a new country, as it means less hassle for setting things up. Moreover, they help if you want to do international transfers with Interactive Brokers (IBKR) if you do not already have a local account in the respective country. This means that for large amounts, it might be best to do the money exchange with IBKR (rather than internally in the multi-currency account, as it may charge higher fees), while still using the multi-currency account to receive the converted currency and then send it its final destination.

Wise (formerly TransferWise)

As of writing Wise offers the largest number of local bank accounts in your name, which you can use to send and receive payments. While receiving payments is generally free of charge, there is a small fee (listed below, up-to-date as of July 2021). Therefore, Wise is generally worse than having a free local bank account, but in most situation it is the easiest way to have a local bank account. The fees for sending money out of your local Wise account are as follows.

• British pound (send money: 0.32 GBP fee)

• Euro (send money: 0.28 EUR fee)

• US dollar (send money: 0.93 USD fee)

• Australian dollar (send money: 0.57 AUD fee)

• New Zealand dollar (send money: 0.76 NZD fee)

• Singapore dollar (send money: 0.93 SGD fee)

• Romanian lei (send money: 3.71 RON fee)

• Canadian dollar (send money: 0.61 CAD fee)

• Hungarian florint (send money: 96 HUF fee)

• Turkish lira (send money: 10.57 TRY fee)

While Wise offers more currencies than the ones listed above, only for these listed currencies, you will actually have a local bank account that allows you to also receive payments in your name (rather than having collective account by Wise to receive payments from different people).

You can open a free Wise account using this link* and get your first transfer (up to 500 GBP) for free. For large amounts, it is typically cheaper to use Interactive Brokers, as explained here.

Using Wise in conjunction with Interactive Brokers

Finally, note that you can even use Wise in conjunction with Interactive Brokers: As Wise provides a local bank account in many countries (including the US), you could first deposit money in one currency and then withdraw the money from Interactive Brokers to your Wise account. In many cases, this will not incur any fees, as you have one free withdrawal per month with Interactive Brokers and Wise does usually not charge for incoming transfers (exception: incoming US wires*). Once the money is in your local Wise account in the correct currency, you can pay for products and services, send money to other people or deposit it to other accounts (in this case, only low fee for sending money quoted above applies).

*) Note that not all brokers support Wise's USD account. For example as of writing, Tastyworks does not accept incoming transfers from Wise, while Interactive Brokers supported Wise previously, but may not do this anymore. Therefore, it is best to test with small amounts.

Why should I not directly exchange the money within Wise? Well, in most cases it will be simpler to just stick to Wise for smaller amounts, but if you want to transfer large sums of currencies supported by Interactive Brokers, Wise will be typically at least an order of magnitude more expensive. For example, sending 10,000 USD from the US to Europe will have an exchange fee of ca. 40-70 USD with Wise, while Interactive Brokers will have an exchange fee of 2 USD.

Revolut

Another well-known multi-currency account is Revolut*, which is also available in many countries. While they offer a large number of accounts in different currencies, most of them are actually just foreign currency accounts (based in Lithuania) which are not connected to local bank accounts in the respective country. These accounts are usually in your name, but transfers are done via SWIFT which usually comes with a hefty fee (such as 10-50 USD) charged by the intermediate banks.

• Local EUR account. All Revolut users get access to a local EUR account based in Lithuania, which allows local transfers via SEPA.

• Local GBP account. All Revolut users get access to a local GBP account based in the United Kingdom, which allows local transfers based on sorting codes.

• Local USD account (only available for US residents). Only US residents will get access to a local USD account based in the US, which allows local transfers via ACH.

• Local AUD account (only available for Australian residents). Only Australian residents will get access to a local AUD account based in Australia, which allows local transfers based on BSB numbers.

Revolut offers the exchange of currencies at fair exchange rates, but only up to certain limits depending on residence country and the account (smaller amounts for free accounts).

HSBC

The Hongkong and Shanghai Banking Corporation (HSBC) operates internationally in a large number of different countries and offers premium customers the option to open local bank accounts in another country where they operate:

• Advantage: This is a real local bank account, which can often be opened from abroad as your local bank.

• Disadvantage: This service often requires a Premier account only available with a high monthly deposits and/or large account balances in their savings accounts (see below).

As of writing (August 2021), an HSBC Premier account has the following requirements (depending on the country of residence):

• Australia: 150,000 AUD in savings account OR 9,000 AUD in monthly deposits.

• USA: 75,000 USD in savings account OR 5,000 USD in monthly deposits OR 500,000 USD in HSBC mortgage.

• UK: 75,000 GBP of annual income plus a certain HSBC UK product (a mortgage, an investment, life insurance or a protection product) OR savings/investments of at least 50,000 GBP.

• Hong Kong: Total Relationship Balance (TBR) of 1,000,000 HKD.

Usually, it suffices to quality for an HSBC Premier account in one country to be able to open international accounts in other countries, which then also fall under the HSBC Premier status.