Why Saving in a Dollar Bank Account is Better than Saving in a Normal Bank Account

Opening a Dollar Bank Account might be an excellent way to diversify your financial portfolio. Not only does it offer a secure and convenient way to hold and transact in US dollars, but it also provides access to international markets and opportunities that may not be available locally. 

What is a Dollar Bank Account?

A dollar account is a type of bank account denominated in US dollars, while a normal bank account is usually denominated in the local currency, the Kenyan shilling (KES).

The main difference between the two accounts is the currency they are denominated in and their intended purpose. A dollar account is primarily used for transactions and savings in US dollars, while a normal bank account is used for transactions and savings in KES.

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Dollar Bank Accounts are typically used by individuals or businesses that engage in international transactions or have income or expenses in US dollars. These accounts may also offer additional features and benefits, such as earning interest in US dollars and easier access to foreign currency loans.

On the other hand, normal bank accounts in Kenya are designed for day-to-day transactions and savings in KES. Depending on the bank and account type, they may come with features like online banking, ATM access, mobile banking, and cheque writing.

It’s worth noting that some banks in Kenya offer both types of accounts, allowing customers to manage both KES and USD currencies in a single bank. However, maintaining a dollar account may require higher minimum balances and incur additional fees compared to a regular bank account.

Benefits of opening a Dollar Bank Account

1. Protection against currency fluctuations

One of the main benefits of opening a Dollar Bank Account as a Kenyan is the protection it offers against currency fluctuations. The Kenyan shilling can be volatile, and its value can fluctuate rapidly due to economic or political events. 

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By banking your cash in US dollars, you can mitigate this risk and ensure that your money is not affected by local currency fluctuations. This is especially important if you’re planning to travel or make international payments.

2. Access to international markets and opportunities

Opening a Dollar Bank Account provides access to international markets and investment opportunities that may not be available locally. For example, you can invest in US stocks or buy mutual funds in US dollars. 

This can provide diversification benefits and potentially higher returns than local investments. Additionally, having a dollar account can make transacting with international partners and suppliers easier, which can help expand your business or personal network.3. Convenience and flexibility

Having a Dollar Bank Account can also offer convenience and flexibility. You can transact in US dollars without worrying about currency conversions or exchange rates. 

This can make it easier to manage international payments or travel expenses. Additionally, you can withdraw US dollars from ATMs or use your dollar debit card for local and international purchases.

4. Safe and secure

Dollar Bank Accounts are generally considered safe and secure, as US banks and the US government back them. This can provide peace of mind for Kenyans concerned about the stability of local financial institutions or political instability. 

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Additionally, many banks offer online banking and mobile apps that make managing your account and monitoring transactions in real-time easy.5. Hedging against inflation

Another benefit of holding US dollars in a dollar account is that it can provide a hedge against inflation. If inflation is high in Kenya, the value of the shilling may decrease, but the value of the US dollar may remain relatively stable. 

This means your money can retain its purchasing power even if the local currency depreciates.

How to open a Dollar Bank Account in Kenya

To open a dollar account in Kenya, you’ll need to have an existing bank account with a Kenyan bank. Most banks offer dollar accounts, and the process of opening one is relatively straightforward. 

You’ll need to provide identification documents such as a passport or ID card, proof of address, and proof of income. Some banks may also require a minimum deposit to open a dollar account.

Conclusion

In conclusion, opening a dollar account as a Kenyan can provide a range of benefits, including protection against currency fluctuations, access to international markets and opportunities, convenience and flexibility, safety and security, and hedging against inflation.

A dollar account can be an excellent option if you’re looking to diversify your financial portfolio and explore new investment opportunities.