What Everyone Moving to Sydney Needs to About Transferring Money
Be sure to check out my post on how to open your Australian bank account before you leave. It goes hand in hand with this post as you will of course need a bank account in Australia before you start transferring money overseas.
All expats shop around for the best deal.
The truth is you will probably end up, just like me, with accounts at each of the four companies I mention in this post, if not a few others too.
I have transferred money with each one and will pick one over the other depending on the amount I'm transferring and how quickly I need the transfer to go through.
I will cover the pros and cons of each of them based on our experience.
Did you see the bold print there?
Yes, this is all based on our experience transferring money back and forth.
I am not a financial advisor which is why I have linked to each forex broker or exchange company below so that you check out each and make a decision as to which works best for your needs.
The main points to consider when transferring money are the exchange rate (obviously), fees, commissions, and time it takes to complete the transfer.
If there is only one thing that you take away from this post, let it be this.
Do Not Transfer Money with a Bank.
Having a separate account just for transferring money may seem like a hassle but when it comes to saving you money and getting the best exchange rate, it is 100% worth it. Trust me on this. When we moved to Australia we transferred our savings from bank to bank and got majorly screwed.
What about international bank accounts?
“But what about my international bank account with Chase (or HSBC)?”
Again, it comes down to the exchange rate. Even though Chase is an “international” bank, the exchange rate is not going to be as good as what you will get using a forex broker.
The same goes for HSBC and Bank American when transferring money to one of their international partner banks.
Still don’t believe me?
Alright, here are five reasons why you shouldn't transfer money with a bank. Any bank, not just the ones that offer international accounts.
Why Use a Forex Broker When Transferring Money to Australia
Better customer service with a forex brokerage.
A forex brokerage business is built on referrals, so customer service is critical.
These companies aren’t as well advertised as big banks. As a result, they value their customers more because they know that you will be transferring money overseas more than once and they want to get your repeat business.
When you phone or email your forex brokerage with a question, you’ll get professional help from a qualified person who specifically deals with forex-related issues.
If you contact a bank with a question about your transfer, you will most likely end up speaking to someone in a call center who deals with all sorts of different banking queries every few minutes.
Is that the person you want to trust your money with?
Better exchange rates with a forex brokerage.
A forex brokerage has lower overhead costs than banks, so they don’t need to charge high fees. And, because they bulk-buy currency, they are happy to pass the discounts onto their clients, saving you money.
Also, the rates offered to you by a forex brokerage will always be better than the banks because of the competitiveness in the free market.
No hidden fees.
Depending on who you use, a forex brokerage is very transparent. This means that there are no hidden costs. What you see is what you get.
Expert knowledge and advice for when to transfer money to Australia for the best exchange rate.
The people you talk with know the foreign exchange market, and they know it well.
It’s essentially their only job. Whereas at banks, the bank clerk does a million other things throughout the day, and they will probably frustrate you more than help you.
Foreign exchange is a forex broker's specialty, and you can’t get better than that.
These companies also know what questions to ask. By asking the right questions, the money transfer process will run more smoothly and they offer you the right solution, the first time.
Fast, secure payment directly into your bank account in Australia.
When using a forex brokerage, payment is quick and secure. Typically, you would wait ten days for your money to arrive on the other side when using a bank, but with a forex brokerage, you would wait two days.
Transferwise, although not a forex broker, does offer fast transfers for a fee.
Handy to know if you forget that your student loan is due or some other bill you have on autopay with your bank back home.
Forex Broker Recommendations: OFX vs XE Money Transfer
Top Pick: OFX
Pros
- Free Transfers for LIFE for SMG Readers. I'm very happy to be able to offer you this. It took some finagling, but they eventually agreed to waive fees just for us.
- You can lock in your rate of exchange and also set up regular payments if you need to transfer money to and from Australia on a regular basis for things like staying on top of recurring bills back home.
- Since they are an online-based company and have a base in most countries, all transfers are considered domestic by banks. Therefore, there is no international transfer fee when you withdrawal or making a deposit using OFX.
Cons
There is a $1,000 minimum transfer limit.Update: New minimum transfer limit for OFX is now $250!
OFX is the forex most referred to in expat forums for a reason.
I have yet to meet an expat that doesn’t use OFX for almost all of their money transfers.
Here’s why you should consider them as your first choice too.
- Since you’re a SMG reader, you get free transfers for LIFE. Yay!
- There are no international transaction fees because of the large network the OFX has.
- Even though there is a minimum transfer amount, almost everyone that is transferring money is transferring more than $250.
- You can lock in your rate of exchange something I highly recommend doing if you are transferring a large sum of money.
Runner Up: XE Money Transfer
Pros
- Fast and free money transfers for amounts over $500 USD, CAD, NZD, AUD and €250 EUR or ￡250 GBP.
- As with OFX, you can lock in your rate of exchange and you can set up regular payments.
Cons
- XE Money Transfer charges a small fee for transfers under $500 USD, CAD, NZD, AUD or €250 EUR or ￡250 GBP.
Watch Out for Bank Fees When Transferring Money Overseas
If you go with another forex brokerage other than the two above, be sure to look up your bank's international transfer fees and include them along with the forex brokerage fee.
For example, my bank is Wells Fargo back in the US and they charge me a fee of $15USD for international transfers. Then Westpac Bank in Australia charges me another fee for an international deposit of $12AUD. Both of these fees are in addition to the forex brokerage fee.
This is one of the nice things about transferring with OFX. Their international network means there are no international deposit or transfer fees from banks.
Don’t Be Afraid to Haggle for the Best Exchange Rate
OFX and XE Money Transfers know that they are in competition for your business, so negotiate to get the best exchange rate possible. I know that might seem like a hassle but if you are transferring a large sum of money to Australia, it can be a difference of a few hundred dollars to thousands.
Forex Alternatives Worth Checking Out
There are two alternatives to forex brokers worth checking out. Both options are secure, fast and all done online.
Top Pick: CurrencyFair
Update: New Offer for SMG Readers, Your First Three Transfer for Free with CurrencyFair!
Pros
- CurrencyFair is all online and also has a mobile app like OFX.
- Fast transfers, usually between 1 to 2 days with an option for faster service if you are in a hurry.
- No international transfer fees with banks since transactions are considered domestic through the CurrencyFair network.
Cons
Cannot transfer money if you are located in the US, but if you are in Australia and want to transfer money back to the US, that’s fine. This has something to do with US banking regulations.- UPDATE: You can now use CurrencyFair to transfer money from the US to Australia or anywhere else for that matter. The US banking regulations has been sorted out. This new development plus the three free transfer offer from CurrencyFair make this an even better choice for transferring money overseas.
- Small fee depending on what currency you are transferring to Australia.
- No personal service or client care. Not possible to lock-in a rate of exchange.
Runner Up: Wise
Pros
- Very easy to use since it’s all online plus they have a mobile app if you need to transfer money on the go.
- Fast transfers, usually between 1 to 4 days with an option for faster service if you are in a hurry.
- A good option for smaller transfers.
- No international transfer fees with banks since transactions are considered domestic through the Wise network.
Cons
- High fees for money transfers. No personal service or client care.
- Exchange rates are only ever estimated and you will not know for sure what your rate is until the deal matures several days later. Rates are also mid-market rates.
- Not possible to lock in a rate of exchange.
Due to high fees and the fact that the exchange rate is just an estimate, I have made Wise the runner-up. But, I feel that I should point out that for fast transfers for small amounts, Wise is my go-to option.
There have been a few times that I have forgotten about a bill back home and Wise have saved my butt.
Australian Bank Fees for Foreign Funds Deposits
Since I’ve brought up bank fees for international transfers a few times I thought I should include links to the major banks in Australia and their fees.
- Westpac Foreign Funds Deposit Fee
- ANZ Foreign Funds Deposit Fee
- NAB Foreign Funds Deposit Fee
- Commonwealth Bank Foreign Funds Deposit Fee
Summing It All Up
Between the two forex brokers I mentioned, OFX is my top pick. If you are transferring a large sum of money to Australia, then I would definitely ask about locking in your rate of exchange.
CurrencyFair is my top recommendation because they have very competitive exchange rates, sometimes beating a forex broker, and they are giving SMG readers the first three transfers fee free. There really is no reason not to check them out and see what you think. Wise is a good option for small, fast transfers, but remember that the exchange rate is only an estimate.
Are you wondering if you owe any tax on the money you transfer to Australia? I have a post that covers taxes and transferring money to Australia here.
