Low Conversion Costs And Zero Account Fees: Foreign Currency Accounts In NZ

Contents:

• What is a foreign currency account? 
• Why open a foreign currency account 
• How does a foreign currency account work?
• Pros and cons of owning a foreign currency account 
• Banks offering a foreign currency account 

Whether you're a frequent traveler, an avid online shopper, or you're getting paid in foreign currency, then you might want to consider opening your very own foreign currency account (FCA) in NZ. Aside from it being a savings account, you can also use your FCA to invest in stocks and trading.

What is a foreign currency account? 

A foreign currency account is an international marketing concept that allows you to deposit in the account payments from export contracts in that foreign currency. You can use these funds to pay for expenses that have been invoiced in the same currency. When received, you may utilise the funds without converting them to or from a foreign currency, such as NZ or Australian dollars, and as a result, you won’t be exposed to fluctuations in exchange rates.

Why get a foreign currency account?

If you're a freelancer or starting a business, you can utilise a foreign currency account to send and receive money in foreign currencies. Most money transfer providers require fees, which may be quite expensive for people wanting to save. But if you're receiving more than $500,000 in another currency, opening an account is worth considering.

Similarly, a foreign currency account is most effective when used to accept currency from clients or customers and pay the same currency to suppliers. All you have to do is keep tabs on the fees and interest for receiving and transferring currencies, as well as any monthly account-keeping fees.

How does a foreign currency account work?

Approval. Like any other type of bank account, a foreign currency account (FCA) is subject to approval by your selected bank. 

Rates. There will also be varying terms and conditions for currency rates, overdrafts, and interest rates, which will differ based on the amount you have in your FCA.

Minimum balance. An FCA, being a form of bank account, has a substantially greater minimum balance requirement than a conventional bank account (savings and checking accounts). Some banks will even terminate your account if you fail to meet their minimum balance requirement.

Fees. These are the costs for receiving money into the account as well as transferring or withdrawing funds from it, among other things.

The following currencies are the only ones that are commonly accepted in a foreign currency account: 

• US dollars (USD)
• Australian dollars (AUD)
• Great Britain pound sterling (GBP)
• Euro (EUR)
• Renminbi (RMB)
• Hong Kong dollars (HKD)
• New Zealand dollars (NZD)
• Singapore dollars (SGD)
• Canadian dollars (CAD)
• Japanese yen (JPY)
• Renminbi (RMB), though currency restrictions often apply

What are the pros and cons of having a foreign currency account?

Pros

An FCA is not only for businesses that serve clients from other countries. This is especially useful while travelling or purchasing things priced in another currency.

Another advantage is that you can avoid paying conversion fees when transferring money. Businesses that receive US dollars into an account can utilise the same account to make US dollar payments, avoiding the need to change the currency back into NZ dollars.

Cons

Before you open a foreign currency account, you should be aware of the fees and charges imposed by your bank. An FCA, as opposed to a conventional local NZ transaction account, is susceptible to additional fees as well as changes in the value and exchange rate, which could affect your bank balance.

Which banks offer foreign currency accounts in NZ?

Bank	Minimum Balance	Account Fee	Other Fees
ANZ	✓	X	✓
ASB	✓	X	✓
BNZ	✓	X	✓
Kiwibank	✓	X	✓
Westpac	X	X	✓

1. ANZ

Currency	Minimum Deposit Amount
US Dollar	$10,000
British Pound	£5,000
Australian Dollar	$10,000
Euro	€7,500
Canadian Dollar	$10,000
Japan Yen	¥850,000

Other fees:

Fees apply across your ANZ Foreign Currency Account:

• Inward Payments
• International Money Transfers
• Foreign cheques (note that ANZ only accepts foreign cheques in AUD, CAD, GBP and USD).

2. ASB

Currency	Minimum Deposit Amount
Australian Dollar	$5,000
British Pound	£5,000
Canadian Dollar	$5,000
Euro	€5,000
Hongkong Dollar	$50,000
Japanese Yen	¥500,000
Singapore Dollar	$5,000
Swiss Franc	₣5,000
US Dollar	$5,000

Other fees:

An updated guide to ASB fees and charges can be found here. 

3. Kiwibank 

Currently, Kiwibank has foreign currency accounts in Australian dollars, Euro, British pounds, Japanese yen and US dollars. Upon request, we may be able to offer foreign currency accounts in other currencies.

Minimum initial deposit: NZ $500 

Other fees: 

• Foreign currency cheque or draft collection fee: NZ $60 charged to your NZD account 
• International bank draft stop fee: NZ$15 per stop 
• Inward international payment fee into your foreign currency account: NZ $12 equivalent per transfer 
• Outward international payment fee-international direct credits and international money transfer: NZ$25 equivalent when done in person at your local Kiwibank or by fax; NZ$20 when done by internet banking 
• Inward international payment fee into your NZD account: NZ $12 transfer 

4. BNZ 

Currency	Minimum Deposit Amount
US Dollar	$10,000
British Pound	£5,000
Australian Dollar	$10,000
Euro	€10,000
Canadian Dollar	$5,000
Hongkong Dollar	$80,000
Singaporean Dollar	$50,000

Other fees: 

Account maintenance fees are charged monthly while rebate levels are subject to change occasionally.

5. Westpac

You can fund your account with any amount in any major currency. Westpac doesn't charge an account maintenance fee, making it easier for Kiwis to open an FCA if they are eligible.

Other fees:

• Buy foreign cash from customer: $5
• Deposit foreign cash to a foreign currency account: 2% of the foreign amount 

How to open a foreign currency account? 

1. Choose the foreign currency that you want to open your account in
2. Provide your personal information 
3. Look into the fees and charges of the bank 
4. If you’re an existing customer, you can submit an online form or contact a customer representative for assistance. 
5. Once your application is completed, prepare the following documents:
1. Proof of address
2. ID (passport or national ID card)
3. IRD number (if any)
4. Previous bank statement 
5. Company/trust/partnership/sole trader documentation 

Note: these are just the common identification requirements by most banks in NZ. You can always reach out to their support team for further enquiries.

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