What is an FCD Account? How It Helps Reduce Exchange Rate Risks

Receiving Foreign Funds: Understanding FCD Accounts

I am about to receive multiple foreign fund transfers, so I consulted with the bank to open an FCD (Foreign Currency Deposit) account.

What is an FCD Account?

An FCD (Foreign Currency Deposit) account is a bank account that allows you to hold foreign currencies instead of immediately converting them to local currency. This type of account is commonly used to store foreign currency deposits for future payments or obligations. It can hold various currencies such as:

• USD (United States Dollar)

• EUR (Euro)

• JPY (Japanese Yen)

Interest Rates on FCD Accounts

The interest rates on an FCD account are usually based on U.S. interest rates. However, the earned interest is subject to a 15% withholding tax before being paid out.

For example:

• The current U.S. interest rate is 4.5%

• After a 15% withholding tax, the net interest rate is:
  4.5% - 15% = 3.825%

• This is higher than Thailand’s local deposit interest rate of 2.25%

If the account is a savings account and earns over THB 20,000 in interest, a 15% withholding tax is applied from the very first baht earned.

How FCD Accounts Handle Foreign Currency Transfers

Normally, when you receive foreign funds in a standard bank account, they are automatically converted into Thai Baht (THB) upon arrival.

However, with an FCD account, the funds remain in their original foreign currency until you decide to convert or withdraw them.

Comparing Regular Bank Accounts vs. FCD Accounts

Let's say you take out a loan from a foreign lender and receive 1 million USD. You may not need to use the full amount immediately and will have to make monthly repayments.

• A regular bank account converts the amount to 34 million THB immediately.

• An FCD account keeps it as 1 million USD.

Now, imagine the exchange rate fluctuates, and next month, 1 USD = 36 THB.

• With a regular account, you now need more THB to repay your foreign debt.

• With an FCD account, your funds remain in USD, so your repayment amount remains the same.

Benefits of an FCD Account

An FCD account helps reduce currency fluctuation risks by allowing you to:
✅ Store foreign income for future use
✅ Make gradual currency conversions instead of converting all at once
✅ Hold FX revenue for future international payments

If you only receive foreign funds but never make international transfers, a standard account may be more suitable.

Fees and Charges for FCD Accounts

Since FCD accounts deal with foreign currency transactions, their fees can be higher than regular accounts.

Depositing Money into an FCD Account

• 0.25% of the deposit amount

• Minimum THB 200 (USD 10), Maximum THB 500 (USD 25)

Withdrawing Money from an FCD Account

• 0.25% of the transferred amount

• Example: A 1 million USD transfer incurs a THB 2,500 fee

• Minimum THB 1,000 per transaction

These fees apply to both international transfers and transfers to other banks within Thailand.

Additional Considerations

Each FCD account only supports one currency.

• If you need to hold multiple foreign currencies (e.g., USD, CNY, JPY), you must open separate FCD accounts for each currency.

Other International Money Transfer Options

Besides FCD accounts, other international money transfer services include:

• SWIFT

• PayPal

• Wise (formerly TransferWise)

Currently, Wise is one of the most popular options due to its competitive fees and user-friendly platform.

Before choosing a method, compare the fees and transaction flexibility to find the best solution for your needs.

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