euro account switzerland

Swiss Euro-Denominated Accounts: Do They Make Financial Sense?

Does opening a euro-denominated bank account make financial sense for residents of Switzerland? This report answers that question.

Compared to stocking euros in cash, using a euro-denominated account has the benefit (in theory) of delivering yields on your assets. Swiss banks primarily offer two types of euro-denominated bank accounts. Both are just as easy to open as regular Swiss franc-based bank accounts.

Euro-denominated private accounts

The first option is a checking account, commonly called a private account or giro account in Switzerland. Private accounts are designed to handle frequent financial transactions. Your debit card (a Maestro card, for example) will typically be linked to a private account.

A disadvantage is that euro-denominated private accounts in Switzerland pay little or no interest, as comparisons show. Many, including the euro accounts from UBS, don’t deliver any interest at all. Additionally, banks generally charge you account fees for private accounts, which adds a cost in addition to not delivering interest.

Euro-denominated savings accounts

Another option is to open a euro-denominated savings account. Many Swiss banks offer these and most banks do not charge annual account fees. Savings accounts are not well-suited to making frequent transfers and other transactions. There are limitations on withdrawals and online banking services (transfers, direct debits) may be limited. Some banks provide ATM cards which can be used to withdraw money from savings accounts at ATMs, but others do not. However, many banks pay some amount of interest for euro savings account balances.

As shown by the interactive savings account comparison, there has been a dramatic drop in annual yield rates for Swiss euro accounts, with yields following the low rates of Swiss franc savings accounts. Because of this, there is little benefit to investing euros in a savings account rather than holding the money in cash.

Speculators should also consider that, in the absence of a fixed floor on exchange rates, the euro could theoretically depreciate in value against the Swiss franc.

Using euro accounts for regular euro transactions

There is one use case in which a euro account can benefit you, which has nothing to do with speculation. Opening a euro account is a good idea if you regularly pay for goods and services in euros.

When you use a Swiss franc account to pay in euro-zone countries, the foreign currency exchange fees will vary depending on the payment processors involved. Because you can transact directly in euros from your euro account, you avoid currency exchange costs. Just note that you do pay in the way of a currency exchange spread when you deposit Swiss francs into a euro account.

If you use credit cards, then using a euro-denominated bank account in combination with a euro-denominated credit card is beneficial. The reason for this is that you avoid paying a credit card foreign transaction fee when making purchases in Eurozone countries. You can settle your credit card bill in euros from your euro account. This way you only pay in the way of the currency exchange spread applicable when you deposit Swiss francs into your account.

It is also important to note that Swiss banks generally charge a fee (a disagio) for cash withdrawals in euros from euro accounts. Some banks charge a fee (an agio) when you deposit euros into your euro account. Banks charge these fees in order to profit from cash deposits and withdrawals.

More information:
Savings account comparison
Private account comparison
Credit cards comparison
Foreign currency accounts explained
Foreign currency credit cards explained
Peer to peer currency exchange explained

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