A recent report from the World Bank showed that it costs individuals in Australia an average of 7.77% to send or receive currency from overseas – wow! If you were to transfer $100,000 that’s a whopping $7,770 in fees!
With this in mind, the real challenge for anyone relocating permanently to Australia will be moving the bulk of your cash assets from your home country without paying this much. So whether you have just landed a job transfer, are off on a working holiday or moving your family back home, here are some hot money tips for helping you save when you emigrate to Aus.
1. Open a local bank account
The sooner you get a local bank account set up the quicker you can access your money. Without a bank account, you’ll have limited ways to access cash once on the ground. Using your overseas debit or credit to pay for things in Australia will incur high foreign transaction fees and ATM withdrawal charges. You’ll want to minimise and/or eliminate these ASAP. Having a local bank account will enable you to transfer your cash assets from your home country without the fees.
2. Register with an online money transfer company
One great way to practice responsible finance when moving to Australia is by opening up an account with an online money transfer service. These companies can facilitate bank-to-bank transfers but with without the high fees and poor exchange rates that banks charge for this service.
Although you are relocating to a new country, there will likely to be scenarios where you will need to move money back and forth between overseas bank accounts. Having an account with an international money transfer specialist will always give you peace of mind that you can easily move money between currencies in the most-cost effective way possible.
3. Get up-to-speed on tax
Settling your tax affairs between Australia and your old home can be very complicated, particularly if you own investments or property. This is an area where it’s probably worth getting some expert advice to make sure that you understand your obligations. Australia has double-taxation treaties in place with a number of countries, so make sure to find out if your home country is on that list. There are also varying rules around tax thresholds for international money transfers about which you should be aware. Generally speaking, when it comes to tax – it’s always best to refer to the experts!
4. Beware of percentage-based transaction fees
When transferring money between countries you need to be wary transaction fees. These are the charges companies levy to facilitate your international payment. They can go by various names: 'transfer fee', 'foreign transaction fee', 'currency conversion fee', or 'account fee'.
Transaction fees can either be a flat $ amount or charged as a percentage of your total transfer. Flat fees can range between zero and $100 while percentage-based fees typically fall between 1.0-4.0%, depending on the provider you choose.
If you are emigrating to Australia you will likely be looking to transfer your savings into Aussie dollars. For high-value transfers be wary of companies that charge percentage-based transaction fees. For example, if the fee is 2.0% of the transfer amount, you'll pay a lot more to send $50,000 to Australia than you would if you send $500. Before you go with a company that uses this sort of fee structure make sure you know what this will be in dollar terms, as a percentage fee may look much smaller than the actual dollar amount.
One way to avoid this hassle entirely is to go with a company that doesn't charge any transaction fees. But, again, exercise caution here. Some companies advertise 'no fees' but then aren't clear about the exchange rate margin they use.
By doing a bit of research you'll find that there aren't many services out there who are totally transparent about the total cost of your transfer. FlashFX is one such company. In addition to not charging any transaction fees we show you the exchange rate we use to convert your money upfront. No hidden charges mean no unwanted surprises
5. Secure the best exchange rate
To better understand how much money you can save when you use an online currency transfer company for your international payments you need to know about the Real Exchange Rate. This is the rate where banks trade currencies with each other. Think of it as the ‘wholesale exchange rate’. When you use your bank to transfer money overseas they often add a hefty margin onto the Real Exchange Rate, as much as 5.0%. This is on top of a fixed international transfer fee.
Securing a fair exchange rate, one that is within 1-2% of the Real Exchange Rate, is the easiest way you can save money on when transferring funds to/from Australia. Look for companies who are explicit about the rates they charge and show you the total cost of your transfer upfront. If a company isn’t advertising the exchange rates they use, don’t be afraid to ask.
Exchange rates are always moving, so make sure go with a service who uses current, up-to-date rates that reflect the true price of the currencies you want to exchange. Check out the currency converter on FlashFX’s homepage to see the rates we use to convert AUD to 17 currencies.
How to set up an overseas money transfer
Once you have a bank account in Australia here’s the information you’ll generally need in order to set up an international money transfer.
• Full name, address and account number for your recipient (you)
• IBAN or Bank Account Number
• SWIFT code or BIC (this identifies the local bank), as well as the full bank address
• Any other banking details such as sort codes or routing numbers