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

Date Jul 12, 2021
Blog category Kiwisaver
By Tina M.
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Contents:

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). Aside from it being a savings account, you can also use your FCA to invest in stocks and trading.

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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).

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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 enquiries) 

In addition to your foreign currency savings account, you can open a Kiwisaver account and earn up to $500 each year. Compare Kiwisaver funds using glimp's comparison tool and find the one that best meets your needs!

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