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6 top tips for sending money overseas
Aussies who send money overseas are missing out on more than $200 million in potential savings. Here’s how to cut costs.
22 Aug 2024
Aussies who send money overseas are missing out on more than $200 million in potential savings. Here’s how to cut costs.
More and more Aussies have been transferring money overseas over the past few years. A new report by the ACCC on international money transfers (IMTs) found that there was a sharp rise in the number and value of international money transfers following the start of the COVID-19 pandemic. The overwhelming reason for sending money overseas is to support family and friends living abroad.
The good news for consumers is that there has been a shake-up over that time which has made the market more competitive. “Fintechs have significantly grown their market share by offering cheaper prices and, sometimes, better service than the big banks,” noted the ACCC. “While the major banks have lowered prices in response to competitive pressure, the big four banks’ prices still remain higher than many of their rivals.”
Despite the lower costs the ACCC estimates that consumers are still missing out on more than $200 million in potential savings. “Significant savings are available when consumers shop around, use online FX calculators to compare prices, and switch providers accordingly,” ACCC Chair Gina Cass-Gottlieb said.
Yet, a survey by the ACCC found that 42.5% of Aussies did not compare prices when choosing a supplier. Not shopping around could cost you a decent chunk of money. The report found that based on the average transaction of $3,138 for a big four bank IMT, consumers could each save about $108 if they shopped around for a cheaper supplier. The savings would be even higher for larger sums. The ACCC found that consumers who used the most expensive bank in February 2024 to transfer the US dollar equivalent of $A10,000 could have saved more than $A400 if they chose the cheapest IMT supplier in its sample.
If you need to transfer money overseas, follow these tips to make sure you get the best bang for your buck.
1. Use FX calculators to compare prices
Comparing suppliers’ prices using FX calculators is the best way to understand who can offer you the best value deal for your transaction, noted the ACCC. Suppliers should offer an FX calculator – those that don’t aren’t following the ACCC’s Best Practice Guidance for IMT transparency.
2. Look beyond the banks
The ACCC suggested consumers consider using non-bank suppliers “as they are often better priced, and consumers can save” adding that “the more consumers that are willing to switch the more likely prices will continue to fall”.
3. Ask about the fees
Make sure you ask what fees the supplier will charge. Also check if you will have to pay any fees other than those charged by the supplier.
The ACCC recommended that you ask the supplier if:
- any banks will deduct fees from the funds being transferred (these are often called correspondent banking fees)
- the bank or supplier that receives the money charges a fee (known as recipient bank fees).
If the supplier deducts extra fees the ACCC’s tip is to ask them to estimate the funds they will deliver to the recipient and if they will absorb these fees and/or refund you any fees incurred.
4. Keep in mind fee-free isn’t always a good thing
“Suppliers who advertise as fee-free may still charge a margin on the exchange rate. It is often hidden and sometimes negotiable or changes based on how much is being transferred,” warned the ACCC.
5. Look at the total price and the amount the recipient will receive
When comparing suppliers, the best way to check if you are getting the best value for your money is to check the total price and the amount the recipient will receive, said the ACCC. That way you don’t have to worry about doing your own calculations to account for fee and foreign exchange margins.
6. Timing can make a difference
Public holidays, weekends or even certain times of the year can have an impact on the value you get for your money. “Currency markets can change, and high-value transactions could be impacted by the time of year or even whether you make a transfer on a weekday or weekend,” explained the ACCC. “Currency markets close for the weekend and some suppliers can charge an extra fee or may charge a worse value exchange rate over the weekend to mitigate for any possible movement in the market.” This is something worth taking into consideration if you can wait to send the money.
Cover image source: BMCL/Shutterstock.com
This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.
