Avoid unpleasant surprises

It is possible to save via a current account or a term account in a currency other than the euro. At what rate? It depends (very) strongly from one bank to another.

Savings products in euros yield very little. Some savers suddenly turn to sight or term accounts in another currency in the hope of getting a little more.

Advantages of Foreign Currencies

Let's start with the first, the interest rate advantage. It is a fact: the rates in dollars, in Turkish lira, etc., are higher than the rates in euros.

Second advantage, the potential for the currency to rise on the foreign exchange market. A potential which is added to the return and which comes from the possible rise (compared to the euro) of the currency which you have chosen. Please note: the currency you have chosen may also fall. The foreign exchange market is difficult to predict and its fluctuations can be significant. In short, the operation is not without risk.

Take the example of the Turkish lira: over the past 5 years, it has lost two-thirds of its value against the euro. Over the same period, the US dollar lost 7%. In both cases, the potential interest rate advantage has melted like snow in the sun.

Foreign currency accounts

You have the choice between current accounts and term accounts. Not all banks offer this service and those that do may only offer one of two account types. BinckBank, for example, offers a current account in foreign currencies, but not a term account.

Term accounts

As a reminder, the term account allows you to invest your money for a fixed period ranging from a few days to 5 years. It goes without saying: the longer the period, the higher the interest rate. Be careful though: if you want to get your money back before term, you will generally have to pay a penalty. Belfius, BNPP Fortis, Crelan, Deutsche Bank, KBC-CBC, ING and MeDirect offer term accounts in foreign currencies.

Current accounts

Unlike a term account, the money you deposit in a foreign currency current account is always available. Therefore the interest rate, when there is one, is lower.

The big banks and the challengers BinckBank, Crelan, Deutsche Bank and MeDirect offer current accounts in foreign currencies, but their number varies greatly: Belfius, for example, gives you the choice between twenty currencies, BinckBank seven and MeDirect two. .

The traps

- Low or even negative rates: rates in foreign currencies are generally not attractive, just like those in euros. In any case, not sufficiently attractive to compensate for the exchange risk. Example: at BinckBank, a current account in South African rand (ZAR) gives a rate of 1.5% on an annual basis. That's about the most generous. Only here, in recent years, the rand has lost about 4% per year. And there is nothing to indicate that it should go the other way.

- Exchange fees: any switch from one currency to another entails exchange fees. They vary, depending on the bank, between 0.5% and 3%.

- Taxation: the Belgian tax authorities impose a withholding tax of 30% on all interest earned on these accounts.

Our opinion

As you will have understood, the saver who opens a current account or a term account in foreign currencies derives no benefit from it. Low interest rates, currency fluctuations on the foreign exchange market due to the coronavirus, foreign exchange fees and the 30% withholding tax form a particularly unattractive combination. In short, the good old savings account in euros is still, by far, the most interesting formula.

Message to investors

As an investor, you may already have a foreign currency account to buy and sell assets in the same currency. If this money is likely to stay in this account for a long time, we advise you to ask your bank what rate they can offer you. MeDirect, for example, offers you a (gross) rate of 0.18% on a dollar account, KBC and Deutsche Bank 0% and BinckBank... a negative rate of 0.50%. These are famous differences!