So you’ve moved abroad and are planning to stay there for a few years or even permanently? Then chances are you have bank accounts and savings back home that at some point you’ll want to bring over to your new country. Or you’ll want to remit money from the new country to pay for a mortgage or other expenses back home. So what’s the best way to do it? Let’s look at an example of moving to Australia and converting sterling into Australian dollars, although the same principle applies regardless of wherever you’re living and what currency you’re converting.
The real rate
The first thing to know is that the currency rate you see may not be the rate you’ll get. When you see a GBP-AUD rate of 1.80 online or on the news, that could be the interbank rate. It’s what the banks use to transact with one another. With you, they’ll want to cover their costs and make a profit, so they’ll add on a margin. Instead of getting 180 Australian dollars for every 100 British pounds you bring to Oz, you’ll be more likely to get around 170 dollars. So make sure the exchange rate you are quoted is the customer rate.
The exchange rate cost is not all you’ll pay. Many financial institutions charge fees for carrying out a transfer. These tend to vary depending on the size of the transfer and whether you do it over the Internet, by phone, or in a branch. In some cases, if the amount of money you’re transferring is large enough the fee may be reduced or waived, although banks are unlikely to waive the fee.
Rates vs fees?
Rates are definitely more critical than fees when it comes to international money transfers. While a $30 fee sounds more of a whack than a $3 loss/$100, the fee doesn’t scale but the margin does. Once you’re transferring large amounts of money, it’s the exchange rate that will hit you the hardest. So the larger the amount, the less significant the fee will be and the more important the exchange rate.
A good rule of thumb is that if you’re an individual or a small business, you’ll probably find better value away from the big banks, who tend to offer their best rates to large corporate customers. CHOICE research found a significant gap between major banks and independent providers, East & Partners carried out benchmarking revealing inferior rates among the big banks, and financial comparison sites such as BestExchangeRates show daily rates and fees for international money transfers from different providers.
Minimise your costs
It’s generally more cost effective to transfer money in larger amounts. You can get access to better exchange rates and fees will be a proportionally lower cost, or there may even be no fees. But if you don’t need all your money yet, or believe there’s a favourable exchange rate shift on the way, you can always transfer what you need now and leave the rest until the currencies tip your way.
Register here and see how UKForex can assist with your funds transfer.
Remember to mention BritishExpat when you register to get your first two transfers FEE FREE!
This article is based on text supplied by OzForex Foreign Exchange Services—UKForex’s parent company.
Transferring money to or from the UK? Why line the banks’ pockets when UKForex offer great rates?