Especially in the lead-up to Christmas, there are tons of reasons why you might need to send an international money transfer.
Whether you’re sending money to friends and family, paying employees or making an overseas investment, you’ll want to secure the best exchange rate – especially if you’re transferring a large sum of money as a minor difference in exchange rates can have a massive impact.
What is the exchange rate?
In simple terms, an exchange rate is the amount of one currency that has to be given up in order to acquire another currency.
Exchange rates constantly rise and fall depending on the strength of a currency in relation to another.
The exchange rate you deal with when transferring money is often different to what you see on the evening news or on a business news website.
What is reported is the interbank rate which is the rate used between banks.
But as a consumer, your rate can include a margin or other fees which are important to look out for.
Online transfer companies vs regular banks
Online money transfer providers and the big four banks will each charge fees differently. Many people assume that the easiest way to send money overseas is through their bank.
However, based on the average amount of USD returned for AUD$5,000, finder.com.au has found online money transfer providers are, on average, $145 cheaper than the big four banks.
Since specialist online transfer companies focus all their efforts on international transfers, they can work within much tighter margins.
As an added advantage compared to regular banks, these specialists often provide 24/7 support teams.
You’ll want this peace of mind if you want to get your transfer over to friends and family for the holiday season.
Comparing your options
To secure the best exchange rate for your situation, you’ll want to compare your money transfer options.
Online calculators allow you to enter the amount you intend to send to see the exchange rate as well as the transfer speed and potential fees.
The cheapest provider for a particular amount of money and destination might not be the cheapest for a different amount of money and destination.
Since the exchange rate fluctuates constantly, the best provider at a point in time might also be dependent on when you check.
Getting the most accurate estimate
Though online calculators are a great place to start, these often only give an estimate since they can be based on an average or indicative exchange rate.
Even if you’ve gone directly to a particular provider and have used their calculator, it might not be entirely accurate.
To get the most accurate figure, the best thing to do is to create multiple accounts with different providers.
This generally allows you to get a more precise quote.
You may find that one supplier that was estimated to be the cheapest might turn out to be worse than another.
With more foreign exchange services than ever, it’s crucial to find one that can secure you the best exchange rate while being timely, reliable and safe.
Taking just a few minutes to weigh up your options can give you huge savings next time you need to send money abroad!
About the author: Bessie Hassan is a money expert at finder.com.au
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