What Is a "Foreign Currency Account"?

A foreign currency account is a type of bank account a consumer obtains at her local bank. The currency in the account, however, is not the same as the local currency.

Options

A foreign currency account is obtained in different ways. A customer opens one at his local bank in a different currency; he obtains one in a foreign bank in a different currency than that country; or he opens one in a foreign bank in that country's same currency.

Purpose

Foreign currency accounts are used for foreign trading transactions and for foreign currency translating and conversions. People investing in a currency other than their own are able to buy and sell investments easier through the use of this type of account.

Popularity

The United States is not the most common place for investors to open a foreign currency account. Most banks in the United States do not offer this type of service. Union Bank in California is an exception to this. These types of accounts are quite popular in the United Kingdom.

Tips

If opening a foreign currency account, investors should choose a bank with an established reputation. The length of business of the bank is an important detail to look into. They should also choose a country with a stable economy and ensure the bank they choose offers easy access to the accounts.

References

• Business Dictionary: Foreign Currency Account
• Union Bank: Foreign Currency Accounts