To save money when you transfer money to a foreign bank account, you should avoid your bank. Most banks’ daily exchange rates contain a hidden margin of up to 5% over the live exchange rate. Big-name payment providers charge similar high margins. Use a specialist money transfer company to keep more of your cash.
The High Cost of Convenience
Using a bank to transfer money to a foreign bank account may seem like an obvious choice. After all, most banks make it relatively straightforward to transfer money online. Once you’ve selected the destination country, you’ll be asked for your recipient’s details, and hopefully you’ll know the difference between a BSC and an NCC (since different countries have different names for their banking codes). If you run into trouble, you could try to call your local branch when they’re open between 9-5, but not on weekends or holidays of course. And once you finally submit the order to transfer money to a foreign bank account, the bank will take their 5% margin on top of the usual $30 fee they charge to send money overseas. (That 5% margin means you’d pay an extra $500 on a transfer of $10,000 just so your bank can send the equivalent of an email on your behalf to move some money.) Oh, and your recipient is likely to pay a similar fee of about $30 to receive the money. If that sounds like a lot to you, you’re not alone.
80% of people we surveyed had no idea that the banks charged margins on international exchange rates.* When they were informed of the cost, 75% said the fees were ‘very high’ or ‘a bank rip off’. We tend to agree.
The Future of Forex is OFX
Fortunately, foreign exchange doesn’t have to be so costly. OFX is a specialist international money transfer provider. All we do is send money overseas at a fraction of the cost of using your bank. Our robust online platform is open 24/7, so you can move your money when you want to. And if you have any questions about those confusing international bank codes, our customer service gurus are available by phone 24/7 too.
If you’re going to be making a number of money transfers to foreign bank accounts, you may want to speak with our dedicated currency specialists who can help you understand currency volatility and who can work with you to develop a plan that minimises your risk.
*Survey conducted by Galaxy Research on behalf of OFX (August 2016). Sample size: 1000 Australians.
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. OzForex Limited (trading as OFX) and its affiliated entities make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.