Five things to get right when sending money overseas
More and more Australians are looking for a taste of the good life overseas.
If you’re planning to make the break, there’s one thing you need to think about more than anything else: how you’re going to transfer money from one country to another.
Here are a few things to watch out for to help you get the best possible deal:
Banks have been known to charge up to $80 per transfer to make a foreign transaction and over time that adds up! Imagine you make a couple of transfers each month your annual costs can quickly top the thousand dollar mark. The solution? Try a specialist foreign exchange company. As well as working with a specialist, they generally charge lower transaction fees (if any at all).
Keep an eye on the exchange rate your provider offers. Banks can be pretty unclear on their offering rate. The rate they publish on their website doesn’t always guarantee that you will get that rate at the time you book in your transfer. Always make sure you know the actual interbank rate so you know how much of a markup your provider is adding. This is one of the easiest sources of hidden fees, so keep your eyes open.
Exchange rate changes
The global economy has been on a bit of a roller coaster ride over the last few years. As a result, foreign exchange markets have been hard to predict, which creates winners and losers in the forex lottery. Transfer at the wrong time and your cash may quickly dry up. One way to guard against this is to use a Forward Exchange Contract (FEC). This allows you to fix the exchange rate from the outset, so you are protected if the exchange rate moves against you.
Dissatisfaction with the banks has opened the door to a whole load of new peer to peer providers. With the aid of a lot of fun advertisements, they appear to offer a much cheaper alternative to foreign money transfer. They aim to bypass brokers’ fees to provide a mid-market rate. However, these firms are mostly still small and developing. They lack the full range of services a more established provider can offer and may not include enough protection. Some providers will be officially regulated, which means your funds are ring-fenced, but others may not be. Check their accreditations and make sure you know what that signifies. You need to know that your provider is reputable and professional and that your funds are protected no matter what happens.
Last but not least, remember to stay safe. There has been something of a gold rush in this area, with lots of fun advertisements promising low rates and great savings. Check what’s behind these promises. Make sure you have a provider who is professional, reputable and offers the range of services and safeguards your need. For all the new players coming into this market, it’s the experienced and reputable firms who will offer the best deal.
OFX, a global supplier of online international payment services and a key provider of forex news. OFX Limited is a publicly listed entity with shares traded on the Australian Securities Exchange under the code “OFX”. You can register directly with OFX via the below link for an obligation free account and take advantage of the special fee-free offer for Ellice-Flint clients.
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Article by Jonathan Sermon, OFX
Disclaimer: all information contained within this article is of a general nature. Do not rely upon when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.