A foreign currency account in the UK gives you access to additional features and enables you to process transactions and hold funds in more than just GBP. If you split your time between the UK and other countries, you do business globally or you have friends and family based overseas, opening a foreign currency account in the UK can be an easy and efficient way to manage your finances.

In this article, we examine what a foreign currency account is, how they work and who can benefit from opening this type of account in the UK.

What Is a Foreign Currency Account in the UK?

As the name suggests, a foreign currency account is an account that enables you to send, receive and hold funds in a currency that is different to your domestic currency. If you open a foreign currency account in the UK, for example, you may be able to transfer funds in USD or receive funds in EUR, as well as managing funds in GBP.

However, some foreign currency accounts only allow you to send and receive funds in one currency, sometimes in addition to GBP. You may find that a high street bank offers a foreign currency that functions exclusively in USD or only allows you to manage USD and GBP, for example.

While this may be sufficient if you only want to trade in one currency, opening a multicurrency account offers greater flexibility. A multicurrency account is a type of foreign currency account in the UK that allows you to send, receive and hold multiple currencies, including GBP. With added flexibility, you’ll find it easy to manage multiple currencies via a single account and streamline your financial management in the process.

What Are the Benefits of a Foreign Currency Account in the UK?

A foreign currency account, or multicurrency account, can deliver a wide array of benefits, including:

Access to Multiple Currencies

First and foremost, you’ll be able to process transactions and hold funds in a variety of currencies, which is advantageous if you’re regularly sending or receiving cross-border payments. However, foreign currency accounts do vary from one provider to another so it’s important to check which currencies are included in advance.

At PayAlly, for example, our multicurrency account enables you to send, receive or hold funds in 39 currencies but many financial institutions offer fewer currencies. By choosing a multicurrency account with a wide variety of currencies, you can enhance the functionality of your account and be confident that you’ll be able to send and receive funds in any currency that you need.

Lower Costs

Making international transfers from a standard bank account can be a costly process but opening a foreign currency account in the UK will enable you to secure lower tariffs and charges. Whether you’re paying a fixed-fee and/or a commission-based charge per transfer, a multicurrency account is often the most cost-efficient way to make regular or one-off international transfers.

Competitive Exchange Rates

Whenever you’re converting funds from one currency to another, it’s vital to pay attention to the exchange rate. This significantly impacts the value of your funds and making the conversion at a time when the exchange rate is working in your favour is a savvy way of maximising your funds and avoiding an unnecessary loss in value.

As foreign currency accounts often offer the most competitive exchange rates, opening this type of account is an effective way to ensure that you won’t pay over the odds when you’re converting currency.

Employ Forward Contracts

If you want to be sure of securing a favourable exchange rate, then using a forward contract can be advantageous. This means you’re able to confirm an exchange rate in advance and protect yourself and your funds from subsequent changes in the market. As a result, you can retain the value of your funds and gain certainty over future transactions.

Easier Financial Management

If you have a separate account for each currency, it can be extremely difficult to keep track of your finances, particularly if you make regular international transfers or routinely receive incoming payments in various currencies.

When you have a dedicated foreign currency account in the UK, however, this information is collated into a single account, which is easier to manage and simpler to monitor. With access to user-friendly account management tools, analytics dashboards and transaction data, you can stay in control of your finances at all times and use centralised reporting to simplify workflows.

Faster Transactions

If you make an international transfer from a standard account, it could take days for the transaction to be completed, depending on where the recipient is located and the type of transfer you make. This is because some international transfers rely on multiple intermediaries to get the funds to their final destination.

In contrast, a foreign currency account in the UK allows you to send cross-border transfers via fewer intermediaries, which accelerates the transaction process and ensures you benefit from faster transaction times.

Who Should Open a Foreign Currency Account in the UK?

Anyone who wants to send, receive or hold funds in one or more foreign currencies can benefit from opening a multicurrency account in the UK. However, these types of accounts are particularly beneficial for businesses that want to operate on a global scale.

When you’re running a business and using a multicurrency account, for example, you can offer more favourable payment options to your customers and negotiate favourable contract terms by paying your supply chain in their domestic currency. As a result, you can generate significant commercial advantages when you have access to a foreign currency account.

Open a Foreign Currency Account in the UK with PayAlly

As part of our custom financial infrastructure, PayAlly’s multicurrency account delivers optimal performance and flexibility. With access to 39 currencies, it’s easy to manage global payments and transfers via a single account and our dedicated Relationship Managers are always on hand to provide any assistance you might need. To find out more, get in touch with our expert team today.