Considering a foreign currency account?
If you’re an account holder at Everbank, which merged with TIAA and then changed its name, then you already have an option for a foreign currency account at your home bank. But while that may seem convenient, is it truly the best option for you foreign currency account? There are a number of foreign currency account options in the States, including accounts offered online that aren’t tethered to any bank at all.
TIAA’s WorldCurrency accounts are set up for those who want to invest and save. That suits many a person’s needs, but not all. Which is why, depending on what you’re looking for, Wise’s borderless account may be a better fit. Wise’s borderless account was created for people whose lives span more than one country — it’s an account that lets you send, spend, and receive money around the world. But more on that later.
As with many decisions, it’s worth looking at all features and costs of a new account in context of what else is out there. So this article will show you the offerings and fees of TIAA compared to the Wise multi-currency borderless account.
What most banks don’t offer their foreign currency account holders is currency exchanges at the mid-market rate. While you may have never heard the term, that’s the exchange rate you see when you Google two currencies. And if you’ve ever taken that exchange rate and compared it with a bank or online money provider’s, you may have noticed that they didn’t match. If you went further did the calculations, you might have noticed the gap could be quite large.
Why is that?
Because banks and money transfer providers typically exchange currency at a marked-up rate — often 4-6% poorer than the rate you find on Google. This allows them to profit off currency exchanges, normally without telling you.
TIAA, however, guarantees that it will offer exchange rates within 1% of the mid-market rate. But that still means there’s a mark-up, even though it’s less than what you’d find at most banks.
So every time you switch between currencies, you’re paying for an exchange rate that’s marked up. At Wise, you always get the mid-market rate, and only have to pay a small fee for currency conversions. Which may mean you’ll save money.
A foreign currency account, or multi-currency account as they’re sometimes called, at TIAA comes with quite a few features that may appeal to you. The offerings are slightly different for personal and business WorldCurrency accounts. So if you’re looking for information on the business side, skip to the next section.
|Offerings||TIAA Personal WorldCurrency Deposit Accounts||Wise personal borderless accounts|
|Minimums||$2,500 to open a single foreign currency account or a minimum of $100 monthly purchase for that foreign currency.¹||No minimum to open, no minimum monthly balance.|
|Maintenance fees||Varies. Will be disclosed at the time you open your account.²||No fee to open. No fee to maintain.|
|Available currencies||You can open a personal account in any one or more of 12 major and 8 emerging currencies.¹||A single account where you can hold and manage 40+ currencies including CAD, INR, AUD, GBP, EUR, HKD, SGD, MXN and more.|
|Exchange rates||If you convert less than $99,000, the spread from the wholesale rate is at least 0.75% but no more than 1%.²||At the exact mid-market rate + a small fee depending on the currency. Rates are the same however much or little you exchange.|
|Local bank details||None. TIAA’s WorldCurrency deposit account is meant for investment savings, not as a multi-nation account.||Your very own local account details for receiving domestic transfers in regions like Australia, the UK, and the EU|
|Withdrawals from account||For some currencies, you only have the option to convert back to US dollars and then withdraw in the same. For other currencies, you may wire money out in a foreign currency or be issued a check.⁴||You can withdraw or send your money from the account to a local bank account in any supported country in that nation’s local currency. Same currency personal withdrawals and transfers are generally free.|
|Incoming transfers or outgoing withdrawal limits||"Federal regulation generally limits this account to six transfers or withdrawals per month, for most types of transfers and withdrawals."¹||No limit on the number of transfers or withdrawals. Some currencies may be subject to monthly or per-transfer amount limits.|
|International wire fees||TIAA international wire fees range from $30-$65 depending on the currency and whether TIAA makes an exchange on your behalf.² In addition, additional fees will be charged by other banks, generally around $30. If TIAA converts for you, there will be a currency exchange spread up to 1%.||Personal withdrawals in the same currency are normally free. If a currency conversion is necessary, then there is a small conversion fee.|
|Interest accrued||Not all currency accounts earn interest. If a currency account can earn interest, minimum accountbalances that range from the USD equivalent of $9K-$59K apply in order to earn interest.⁵||None|
|Retirement options||IRA eligible¹||No specific offerings|
|Debit card||None for WorldCurrency Deposit accounts||At the time of writing, available to UK/EU residents. Available to US residents by the end of 2018.|
|ATM withdrawals||Not applicable||For debit card holders, first £200 withdraw within 30 days is free, after that charge of 2%|
As mentioned in the last section, TIAA does offer a foreign currency account for business customers, and its features are very similar to the personal account. Here are the costs and options you can find associated with business WorldCurrency Deposit Accounts.
|Offerings||TIAA Business WorldCurrency Deposit Accounts||Wise business borderless accounts|
|Minimums||You can open a single foreign currency account with $2,500 or choose a $100/month equivalent purchase plan.⁶||No opening minimum. No monthly balance minimums.|
|Maintenance fees||Any monthly maintenance fee charged to your account will be disclosed to you on your rate sheet at the time you open your account.⁶||No opening charges. No maintenance fees.|
|Currencies available||You can open an account in anyone one of 12 major and 8 emerging currencies.⁶||With a single account you can hold and manage 40+ currencies available including CAD, INR, AUD, GBP, EUR, HKD, SGD, MXN and more.|
|Exchange rates||If you exchange $99,000 or less, the spread is between 0.75%-1%. The rate improves the more you exchange — the lowest spread at 0.25% for exchanges over $750,000.⁷||At the exact mid-market rate + a small flat fee depending on the currency which is the same no matter how much or little you exchange.|
|Local bank details||None. TIAA’s account is meant for investment savings, not as an account for use in multiple countries.||Your business’ own local bank account details for receiving domestic transfers from clients in regions like Australia, the UK, and the EU without expensive international fees.|
|Withdrawals from account||For some currencies, you can only convert back to and then withdraw in US dollars. For other currencies, you can wire it out in a foreign currency or be issued a check.⁶||You can send your money or withdraw from the account to a local bank account in any supported country in that nation’s local currency for a small cost.|
|Limits on incoming transfers or outgoing withdrawals||“Federal regulation generally limits this account to six transfers or withdrawals per month, for most types of transfers and withdrawals. Certain transfers and withdrawals are not subject to this limit.”⁶||No limit on amount of transfers or withdrawals, Some currencies may be subject to monthly or per-transfer amount limits.|
|International wire fees||TIAA international wire fees range from $30-$65 depending on the currency and whether a currency exchange is required.² Additional fees may be charged by other banks.⁷ If TIAA converts for you, an added currency exchange spread will added up to 1%.²||Business withdrawals or transfers in the same or different currency have a small fee. If a currency conversion is necessary, then there is also a small conversion fee.|
|Interest accrued||If the currency is eligible, in order to earn interest you must hold a minimum account balance that ranges from the equivalent of $9K-$59K in that currency. At the time of writing, currencies that may accrue interest are BRL, INR, MXN, RUB, and ZAR.⁸||None|
|Debit card||None for WorldCurrency Deposit accounts||At the time of writing, available to personal customers who are UK/EU residents. Planned expansion to US residents and business account holders.|
|ATM withdrawals||Not applicable||For debit card holders, first £200 withdraw within 30 days is free, after that charge of 2%.|
|Forex services||Business account holders have access to TIAA forex specialists.⁹||Wise offers rate alerts and trained customer support available for your assistance.|
Debating opening a foreign currency account at TIAA and want to find out just a bit more? Here are some basics you should know before you decide which bank or service is the right one for you.
Though TIAA doesn’t charge anything for incoming wires to your TIAA WorldCurrency account, there are still limits.
A TIAA foreign currency account is classified as a savings account. Which means if you need to make frequent transfers or withdrawals, it may not be the best account for you. Those types of transactions are generally limited. Here’s what TIAA says about transaction limits:
Federal regulation generally limits this account to six transfers or withdrawals per month, for most types of transfers and withdrawals. Certain transfers and withdrawals are not subject to this limit. See the Terms, Disclosures and Agreements Booklet [source 2 below] for details. If you exceed these restrictions, you may incur service charges, and we may close or convert your account to a non-interest bearing transaction account for repeated occurrences.¹
That said, as long as you don’t need to move money outward more than a handful of times a month, TIAA’s multi-currency account could be a budget-friendly option.
When you open up a WorldCurrency account with TIAA, you will only have one foreign currency in that account. Which may bring up questions of how to add money. After all, if you’re living in the US, you may only have bank accounts in US dollars. So can you add money to your foreign currency account in US dollars? Or does it have to be only from another foreign-currency denominated account?
Interestingly, TIAA notes:
Typically, our clients give us U.S. dollars and ask that we convert the funds into the foreign currency. When we do, we charge you a conversion cost or “spread,” which typically is a 1% or less markup over the wholesale exchange rate we are able to obtain from our institutional sources. The same charges will apply again if and when you later convert back to U.S. dollars or to any other currency.⁴
So, that’s your answer. Most TIAA foreign currency accounts receive deposits in US dollars, which TIAA then converts at a price.
However, there’s more than one way to deposit money into your foreign currency account. Each option comes with its own pros and cons:
- Foreign currency cash — TIAA doesn’t accept any physical cash for deposit.²
- Foreign currency check — There will be a delay of around 4-6 weeks for your check to be processed and deposited into your account.²
- Foreign currency wire — The funds will be available the next business day.²
- US dollars deposits — “If you send us United States dollars to fund an account that will be denominated in a foreign currency, your United States dollar deposit first will be made to your Cash Management Account .... On the day your United States dollar funds are available, those funds will be transferred to your WorldCurrency® Account for the foreign currency transaction you have requested.”²
From surveying the available options above, if you open a foreign currency account with TIAA, it’s may be best to either deposit in US dollars, which TIAA will then convert with an exchange rate spread, or send a wire in that foreign currency directly to your account.
No matter what account or money transfer service you decide to go with, knowing your options is the first step to knowing which one will best suit your needs.
- https://www.tiaabank.com/investing/currency-access-account (July 15, 2018)
- https://www.tiaabank.com/media_library/tiaabank/_shared/pdf/terms-personal.pdf (July 15, 2018)
- https://www.tiaabank.com/investing/currency-account-rates (July 15, 2018)
- https://www.tiaabank.com/media_library/tiaabank/_shared/pdf/terms-foreign-currency.pdf (July 15, 2018)
- https://www.tiaabank.com/investing/currency-account-rates (July 15, 2018)
- https://www.tiaabank.com/business/accounts/currency-access-account (July 15, 2018)
- https://www.tiaabank.com/media_library/tiaabank/_shared/pdf/terms-business.pdf (July 15, 2018)
- https://www.tiaabank.com/business/services/foreign-exchange (July 15, 2018)
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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