Diversification with foreign exchange: When a foreign currency account is worthwhile

• Foreign currency accounts enable interest income and currency profits
• Check fees, account conditions and individual investment goals before the opening
• For whom foreign currency accounts are worthwhile

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Foreign currency accounts offer investors the opportunity to keep money in currencies other than the euro. The possibilities range from an assignment as a checking account to a strategic investment. Especially for entrepreneurs who are also active outside the home market and do business in foreign currencies, the establishment of a foreign currency account is ideal. In this way, you avoid constant money exchange measures and the associated exchange rate fees. But such accounts are also an option for investors – for speculators as well as for investors who are very popular with diversification.

Account setup is very easy

The establishment of a foreign currency account, which is often also called a currency account, is very easy. The account is opened at any bank, and online brokers also have such offers. In some cases, foreign currency accounts are linked to the existence of a checking account – if you do not have such an account, this must be opened as a prerequisite. It is therefore worthwhile to request the conditions at your own house bank when looking for a provider of a currency account before extending the search for an account provider.

The next step is to select the currency in which it is to be created. Foreign currency accounts are often in British pounds, dollars or Swiss francs, but customers also have other currencies to choose from. Which motto you finally choose depends on the purpose of a foreign currency account: Entrepreneurs will choose the currency in which they are most common, while investors will primarily choose currencies from which they promise the best exchange rate gains.

Cost manageable

As a rule, foreign exchange costs are not more due to fees for overnight accounts than in this country. Nevertheless, the conditions are sometimes different depending on the credit institution: While some financial houses or brokers do not require any account management fees, other banks can do this. Interested parties should compare the account conditions precisely, because the fees for the deposit also vary from provider to provider and are, among other things, dependent on the currency and the deposit amount. Here again makes sense to examine the purpose of the foreign currency account exactly: in particular, dealers and investors who often pay smaller or larger amounts to the account should not be afraid of comparing the conditions.

In this way, investors benefit from foreign currency accounts

For investors, foreign currency accounts are a component for diversification of the portfolio. By holding assets in different currencies, the depot can be erected wider, which reduces the risk that is associated with concentration on a single currency.

There is also the possibility of intercourse gains. If the exchange rates develop cheaply, investors can exchange foreign currencies at a better course in euros. However, an opposite exchange rate development is also conceivable, then possible losses of exchange rate are the result.

A possible interest difference between the Euroland and the country of the chosen foreign currency can also benefit investors. You then achieve return by relying on getting a higher interest rate in other currency areas. However, investors should keep an eye on both the interest rate development: in countries with high key interest rate, the currency can result in the currency at the same time, because high interest rates are often accompanied by high inflation and reinforced currency risks.

Foreign currency accounts bring this risk with them

Naturally, foreign exchange contents also have risks. In the top priority, the exchange of exchange rate is to be mentioned, because currencies are subject to fluctuations. Not only market movements can influence exchange courses, economic policy measures also have consequences for the foreign exchange market. It is therefore particularly important for long -term investors to sit out possible price losses.

Depending on the institute and the associated fee schedule, higher costs may apply to foreign currency accounts. In addition to account management fees, institutes also also calculate currency conversions or foreign transfers.

In addition: Foreign currency accounting owners have to tax currency profits, but since 2025 they no longer fall under speculation- but now under capital income. Unlike before, the banks and no longer the taxpayers themselves are responsible for reporting foreign currency gains, the institutes then automatically carry out flat tax.

Conclusion: Is a foreign currency account still worth?

Foreign currency accounts remain an interesting way to diversify and use currency and interest rate advantages. If you want to conduct such an account, you should not only deal with the economic opportunities, but also with the tax risks.

Companies that own international business partners or branches abroad, as well as private individuals who regularly receive or transfer money in a foreign currency are well advised with foreign currency accounts. Investors who want to diversify currency risks or people who live or work abroad for a long time should also take a closer look. If necessary, investors should clarify with a tax advisor whether foreign currency accounts are worthwhile for them.

Editor finance.net

This text serves exclusively for information purposes and does not represent an investment recommendation. Finance.net GmbH excludes any regress entitlements.