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Can I open a foreign currency term deposit in Australia?

Can I open a foreign currency term deposit in Australia?

When you deposit foreign currency into a standard Australian bank account, the funds automatically get converted into AUD. But if the Australian dollar isn’t performing well against other currencies or you wish to hold onto some foreign cash, you may consider opening a foreign currency term deposit account instead.

What is a foreign currency term deposit account?

A foreign currency term deposit is a fixed term investment in another currency. This type of account offers you the same benefits as a regular term deposit account, while also allowing you to save in different currencies.

With a term deposit, you receive fixed interest rates for the duration of your chosen term. You can choose a duration as short as 30 days or up to 12 months, depending on your financial goals and cash flow needs. While there is often no maximum term deposit amount, some banks do have a minimum investment requirement.

What are the key features of the foreign currency term deposit?

  • A variety of currencies available: Some banks will allow you to hold in up to nine foreign currencies. These include Great Britain Pound sterling (GBP), Euro (EUR), Canadian dollars (CAD), Hong Kong dollars (HKD), Singapore dollars (SGD), United States dollars (USD), Japanese yen (JPY), New Zealand dollars (NZD) and Chinese Yuan Renminbi (CNY). Transactions with CNY may attract some restrictions. Some accounts allow you to  transfer between currencies.
  • Deposit amount: There is often a minimum deposit that you will be required to make with the foreign currency term deposit which varies from currency to currency.
  • Deposit term options: You can choose terms ranging from one, two, three, six or 12 months.
  • Interest rates: There are fixed interest rates for foreign currency term deposits in Australia, but the rates may vary for each currency that you save in.
  • Interest payout: You will receive the interest payment at the time of account maturity.
  • Account term maturity flexibility: At the time of term maturity, you can either withdraw the total amount or reinvest all or part of it. Often if no re-investment instructions have been provided, your bank will reinvest your maturity sum into the same term deposit, for the same period, at the existing rate for that day.
  • Monthly fees: Many banks do not charge any account opening or monthly fees with the foreign currency term deposit.
  • Account management: You can access and manage your foreign currency term deposit using your mobile or through the internet.

How can I apply for a foreign currency term deposit in Australia?

Before you apply, you will often have to check your eligibility either online or in a branch. You’ll need the following details:. 

  • Proof of identity and residence: You’ll need documentation of your residential address, such as a passport or driver’s licence. 
  • Applicant’s age: To be eligible to apply for the term deposit, you need to be at least 18 years or older.
  • Deposit amount: The minimum amount you need to open the account in varies from currency to currency.
  • Tax file number: You will be taxed on the interest you earn in your foreign currency term deposit. 

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This article was reviewed by Kate Cowling before it was published as part of RateCity's Fact Check process.

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