Which euro account is best for you?

Euro accounts are available from most high street bank branches in the UK. Barclays, Lloyds TSB and Bank of Scotland offer euro current accounts if linked to sterling accounts and the Royal Bank of Scotland (including NatWest) and HSBC will provide stand-alone euro accounts to new and existing clients.

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Euro accounts are available from most high street bank branches in the UK. Barclays, Lloyds TSB and Bank of Scotland offer euro current accounts if linked to sterling accounts and the Royal Bank of Scotland (including NatWest) and HSBC will provide stand-alone euro accounts to new and existing clients.

Barclays is introducing a new, interest-bearing euro account with a charge card, but customers must pay fees of 2.99 per cent per transaction. Gordon Rankin at Barclays' private client business, believes this type of account will attract people who found foreign currency accounts too restrictive. "People usually opened currency accounts because they lived in the euro zone, had a second home, or ran a business there," he says. "But we anticipate that people who travel frequently will find it convenient to have a euro account."

HSBC does not require any minimum balance on its euro current account, but customers must pay charges of £2.50 per month, plus 1 per cent for cash withdrawals and deposits.

One means of opening a low-cost euro account today may be to go directly to a bank in the Irish Republic. The National Irish Bank says that if individuals go into one of its branches and can satisfy strict money laundering requirements – involving the production of personal identification such as a driving licence and domestic utility bills – then it will open a no interest euro current account for them, even if they are solely resident in the UK. There is no minimum deposit for the current account, which comes with a Maestro debit card that the bank says is accepted in ATMs in every country in the euro-zone.

The financial researchers MoneyFacts also list 29 offshore banks offering euro savings accounts. Abbey National Offshore, Bank of Ireland, Gerrard, Lloyds TSB, Scroders, Standard Bank and Woolwich Guernsey all offer debit cards, but many of the accounts require substantial minimum deposits. The best interest rate available from the euro offshore accounts is 3.5 per cent, on Anglo Irish Bank's seven days notice account and First Active Bank's 30 days notice account.

Even deposit accounts in euros pay modest rates of interest. Base rates in the euro zone are lower than in the UK, banks in the euro zone itself pay little or no interest on current accounts and fee-free banking is less common than in the UK. Instead, regular travellers to the euro zone may find a euro account pays for itself by reducing foreign exchange charges and fees for using overseas cash machines.

"We take the view that, with interest rates being where they are, people will want euro accounts for their functionality," says Jonathan Mindell, sales and marketing director for Citibank in the UK. "Free banking and free transactions are more relevant than interest." He says that the only time customers are charged is when they convert pounds into euros, or back again. For frequent travellers, cutting out exchange fees can quickly outweigh the lack of interest. To make the most of the euro, though, it is important to pick an account with a debit card.

Lloyds TSB charges €50 a year for its card account, while HSBC levies a fee of £35 twice a year on its savings account, although this is waived for customers who keep at least €2,800 in the account. Transfers to and from sterling accounts within the same bank are usually free, but do incur foreign exchange charges. Charges also need to be considered if opening an offshore euro savings accounts.

Alliance & Leicester International pays 3 per cent for its euro savings account, but electronic transfers cost £15 and drafts £20. Transfers to other Alliance & Leicester accounts are free, but attract exchange charges. Halifax International, which pays up to 3.75 per cent on its euro account, charges euro €30 for an electronic transfer. Nationwide International charges £30 and Woolwich £20.

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