Penny ante foreign currency account bleg

Does anyone know how I can buy a small amount of a foreign currency and stick it into a bank account to be used later?

Backstory: In a couple months, I’m going to do a transaction with the British government, which will, obviously, be in pounds (about 500 of them). (I’m going to get my hands on dual citizenship. Can’t do it now because I’m waiting for documents to arrive.)

I really like the exchange rate for dollars to pounds right now — it’s lower than it has been for a long time, and I don’t know any reason why it should stay low.

Ergo, I’d like to buy pounds and fund some kind of an account with them, such that in a couple months I can just cut Her Majesty a check with funds that I have already acquired, at the current happy exchange rate. Rather than the easy, but (I have a hunch) more expensive route of just buying pounds then, e.g., by putting the transaction on a credit card at the time.

You’d think this would be easy, huh? But I’ve spent all afternoon going from bank to bank, and I’ve checked with HSBC, Wells Fargo, Bank of America, and even Barclays, as well as a couple more obscure ones.* No dice.** The closest I’ve come is with BofA, who told me that they can do this, but that the minimum to open a foreign currency account is in the six figures. That obviously does my grad student ass no good whatsoever.

Does anyone know who will do this for me?

(Aside to my libertarian homies: is this the best your precious capitalism can do? The government ain’t standing in my way here. If capitalism means the only entities who can get financial services are corporations,*** then paint me Red and call me comrade.)

*I feel particularly betrayed that Barclays won’t do it. Barclays is a British bank, for fuck’s sake, and a venerable one. Why won’t it meet my demand for pounds?

** Several don’t even trade in foreign currency at all. I’m reminded of my mother’s experience a few years ago, when, stymied at trying to buy foreign currency at her own bank, she spat out “sorry, I thought this was a bank,” turned on a heel, and stalked out. Yes, blood will sometimes run true.

Another told me they only sell foreign currency to their account-holders. I offered to open an account. But it turns out they still don’t do foreign currency accounts, so what use exactly would that be to me? I suppose I could buy pounds in cash and stuff them under the mattress for a couple months. Or, perhaps, send them to a friend in England to open an account for me. But, really?

*** At one bank, which told me they only offer business services, I offered to form a dummy corporation so that they’d deign to do business with that, rather than with a mere flesh-and-blood legal person. Nope.


7 Responses to “Penny ante foreign currency account bleg”

  1. Mike Says:

    Aren’t you an international man of mystery? Surely you have a friend living in England who you could pay for some pounds, and s/he would just set those aside/put them “in trust” until you needed them. Hell, even *I* have one such friend. S/he would just get a check set up for you when the pounds were needed.

    I’m not the greatest guy with money. But even I’m reliable enough to set aside a grand for a homie.

    Maybe hit up your British friends. That’s what Facebook is for.

  2. Mike Says:

    Looks like capitalism meets your needs:

    I’m not sure on minimums, but they have an e-mail addy for contact information.

    Factor transaction costs into the equation, though. Do you think the dollar’s fall will be greater than the transaction costs?

  3. Paul Gowder Says:

    Thanks, I’ll try them!

    WRT my international man of mystery status, the problem is that international men of mystery tend to have the sort of friends who are liable to be captured by MI-5 at any moment.

    Or, in mundane terms, my friends in England are either awesome but a little flaky academics/actresses who are terrible about returning e-mails, or family friends who would require complicated and tedious explanations as well as contacting through mother, etc.

  4. Ted Says:

    Wow, imagine that: a bank isn’t going to waste time providing a transaction that will cost it $40 or $50 and earn it nothing, while exposing it to any number of expensive class actions. Somehow that does not strike me as a failure of capitalism, any more than my inability to purchase pink unicorns on the free market is.

    Mike misses the fundamental flaw in your reasoning.

    If, in your economic wisdom, you are certain the dollar is going to drop more than 5% versus the pound before the trip (a stunning indictment of the presidential candidate you just voted for), then buy the pounds now and stuff them under the mattress; otherwise, just hold your horses and buy the pounds when you go to England.

    But if you have that much foresight into currency movements, you’re thinking far too small by trying to save a few bucks in currency exchange rates. Buy options, and use the profits to fund the trip.

  5. Paul Gowder Says:

    How does doing a currency trade expose a bank to class actions? (And presumably, the lucky bank who would sell me the currency and open the foreign currency account would charge a fee for the privilege, which I’d be happy to pay.)

  6. Ted Says:

    You haven’t noticed the gigantic swath of boilerplate you have to sign off on just to open a savings account in a bank? It’s a product of statute, of regulation, and of litigation for claims of failure to disclose to a plaintiff’s lawyer’s satisfaction every jot and tittle of every scenario affecting the account. So you’re asking a bank’s attorneys to generate that boilerplate (and train its employees) for a specialized account that a tiny fraction of its customers will use. And that’s assuming (which I may have done incorrectly) that banking regulations even permit banks to offer foreign-currency accounts or whether such accounts are considered a different legal category for which run-of-the-mill banks are not allowed to participate because of the possibility of currency fluctuations. Again, nothing to do with capitalism, everything to do with the transactions and regulatory costs imposed by government intervention.

    If you give me $1200, I’ll happily go out and buy 500 pounds and hold them for you for six months, Paul. Of course, then you lose the currency advantage you’re seeking, and wouldn’t want me to do it. Again, not a failure of capitalism that banks don’t provide a service that customers don’t want to pay the costs of.

    And you ignore the real point, which is that your entire proposed transaction is readily available through Charles Schwab: buy yourself a forward contract for pounds, which is what you’re really asking for. You also ignore the arrogance underlying the premise of your proposed transaction, which is your belief you can predict currency movements better than the market, which, if true, is foolishly wasted on trying to game your savings account for a few dollars when you can make thousands making the same bet with options.

  7. Paul Gowder Says:

    Thank you, for the useful information re: Charles Schwab.

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