Opening a Foreign Currency Account

If you foresee a lot of your business involving European and foreign companies then it may be shrewd to set up a foreign currency bank account.

Dollar and Euro accounts are offered by most UK banks, including Barclays, Co-Operative Bank, HSBC, Lloyds TSB, NatWest and the Royal Bank of Scotland.

They are a good option for firms that do a lot of importing and exporting and have many advantages.

For a start, they are easy to access with most of them providing the same methods of access as UK accounts such as via the branch, telephone or online.

Another plus is that you will be able to discuss any transactions in your mother tongue in this country, precluding the possibility of getting things lost in translation.

Perhaps the most useful aspect of having this type of account will be the fact that you won’t have to keep paying to convert foreign currency to sterling.

However, subject to certain conditions, some banks will charge the account holder a fixed monthly or yearly fee, although a few do offer the service for free.

Interest rates vary with each account. Generally speaking the rate is tiered according to how much you have in the account – so the more you put in, the more interest you accrue.

There are a few disadvantages to bear in mind too, so doing some research before you take the plunge is advisable.

Beware of charges for account activity that you take for granted on your domestic account, such as writing a cheque.

Also be mindful that if you want to convert foreign currency into sterling to use in the UK then you may face a loss if the pound is strong against that currency. And it may take a while for the exchange rate to move in your favour, if at all.