Pros and Cons of Multi-Currency Bank Accounts
Unsecured debt levels have risen incrementally in the UK in recent times, with credit card liability a significant factor in this.
In fact, credit card debt has continued to grow at its fastest rate since before the financial crisis in recent times, with an annual growth rate of 8.3% recorded in February. This is the highest rate of growth for 12 years, and it’s unlikely to abate any time soon.
While this may serve as an argument against taking out a credit card, this can be beneficial in a number of different circumstances. In this post, we’ll ask whether it’s worth having a credit card or bank account in another currency, and whether this can reduce conversion costs when travelling.
Could an International Credit Card Benefit you?
In recent times, we’ve seen considerable diversification within the credit card marketplace, with a host of new products having been developed to suit the wider economic climate.
Take the emergence of cards for people with bad credit, for example, which are available through lenders such as Ocean Finance and have enabled those affected by the great recession to take out a much needed line of credit.
This allows applicants to build a history of positive transactions and lay the foundations for a superior credit rating in the future.
The case for an international credit card (or bank account) is less clear, although it’s far easier to make in an increasingly connected world. In fact, the decentralisation of financial services and platforms has created an interconnected society, and one where people are increasingly inclined to live and work abroad.
In this respect, an international credit or bank account holds inherent value, as it can help holders to avoid paying extortionate conversion fees that lenders occasionally charge when money is accessed abroad.
This may be particularly beneficial when the account relates to a widely used currency such as the Euro or the U.S. Dollar, although ultimately your choice of international currency would depend on your intended destination.
The Last Word
While there is merit to the idea of applying for a credit card or a bank account in a foreign currency, this will depend almost entirely on your own unique circumstances.
If you travel regularly to a single destination such as North America or the EU members states, for example, holding a card in a relevant currency can trigger incremental savings over time. It also negates the impact of potentially high conversion rates, which is especially beneficial given the fluctuations of the pound.
If you do not travel extensively or like to visit locations across the globe, however, this option does not offer the same level of value. This is why you need to consider the circumstances carefully, before arriving at an informed and beneficial decision.