Pay fewer fees, get a great rate and avoid common traps when you're sending money overseas.
From shrewd business owners to thrifty mothers and fathers, some Australians are sending money overseas much more cheaply and efficiently than the average bank offers.
Their secret is that they send money using a range of dedicated money transfer services and products which have lower fees, more options and better exchange rates than what regular bank services offer.
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Click to expand | How do I use your comparison table?
Save money when sending money overseas by learning how to use the table below:
- How much would you like to transfer? Enter this amount into the box provided below.
- What currency would you like to transfer? Choose the currency that you're converting to and from.
- What is the best option for me? Use our filters to help you decide which option is best for you.
- Read to apply? Find out more about a money transfer by clicking 'More', or securely go to the transfer service's website to register by clicking 'Go to Site'.
During Christmas 2015, research conducted by finder.com.au has found that Australians could save on average $63 when transferring $1,000 overseas by comparing their options. There has been a 15% increase in the number of Aussies searching for better deals (when sending money overseas), compared to 2014.
With problems like hidden fees, delays and charges from banks at both ends, you can soon find yourself significantly out of pocket. The other thing to consider is if there's a margin on exchange rates.
You've probably noticed that the exchange rate you see reported in the media, which is known as the wholesale or mid-market rate, isn't the same rate you get when you make a transaction. Financial services providers make their profit on the margin added to this wholesale rate. With all this in mind, it pays to compare the products available to make sure you find the best overseas money transfer solution for you.
International money transfers let you send money quickly and securely to countries around the globe using different currencies and there are several ways you can transfer money overseas.
These companies are perhaps the quickest and cheapest way to transfer funds overseas and they let you set up an online account to send your money electronically. It's a quick way to get your money where you need it to be, but you will need to be comfortable making financial transactions online.
Examples of online money transfer companies include OFX, World First and CurrencyFair and the industry continues to grow. Once you've created an account, these companies transfer these funds to your nominated account.
Some providers have a minimum transfer amount (approximately $1,000 - $2,000), while other companies have no minimum. Other fees involved can include a transfer fee and transaction charges when the money is deposited at the other end.
You can save up to $60 for every $1,000 compared to the banks, you send if you use a specialist money transfer service instead.
Case study: OFX (formerly Ozforex)
As an example, say you want to transfer money overseas through OFX. You'll need to send at least $2000, but OFX will charge wholesale foreign exchange rates and a smaller margin - as low as 0.3%, compared to the average bank rate of 4%.
OFX charge their fees in the currency you're selling and will waive the fee completely if you transfer over a certain amount. If you're transferring less than $10,000 Australian dollars, the fee is $15. The online money transfer market is growing all the time and becoming increasingly competitive, so if you choose this option to send money overseas, shop around for the best possible deal.
You can transfer money to an overseas bank account straight from your own account. This method is also known as an international money transfer, a telegraphic transfer (TT), or a wire or SWIFT transfer. While this option is convenient and secure, it does have downfalls.
It may take several days for the money to go through and there are also a number of fees to consider. Your bank and the bank at the other end of the transaction could charge 'sending' and 'receiving' fees, while the exchange rate offered can have a huge effect on how much the transaction ends up costing you. The Commonwealth Bank transfers money to over 200 countries, using more than 30 currencies, but you'll have to pay a $30 fee if the transfer is issued via a branch, or a $22 fee if it is issued via NetBank. Exchange rates vary, so shop around for a good deal.
Money transfer companies can send your money abroad using cash or EFTPOS. These companies will have a storefront or third-party convenience store counter and whoever you send the money to will be able to collect the funds from the money transfer office in their country. While this cash transfer option is usually extremely quick, it can be expensive.
Companies such as Western Union, Xpress Money and MoneyGram offer this service. Once you've set up an account, depending on the company you may also be able to transfer money online, over the phone or using a bank card.
MoneyGram has more than 320,000 agent locations worldwide and the fees involved in transferring money overseas can vary depending on a range of factors including how much money you're sending and where you're sending it. As an example, however, MoneyGram's cost estimator calculates that transferring $1000 from Australia to the United States will incur a fee of $65.
Safer than sending a personal cheque overseas, an international money order (IMO) is when you give your money to a bank or post office and get an international guaranteed cheque. Think of it as the international equivalent of a bank cheque.
Once you've posted the cheque to the recipient, they can cash it at their local bank and deposit the money into their own account. While this transfer method is secure, posting a cheque will take longer than an electronic transaction and can cost more. You'll have to pay to purchase the IMO and there may be transaction costs when the money is deposited into the overseas account.Back to top
Take advantage of offers such as 'first transfer free'
You'd be surprised at the length that new money transfer companies are willing to go for your business. Get your first money transfer for free when signing up, though standard fees apply thereafter for transactions that fall below their fee thresholds. You could save up to AUD $15 using services such as HiFX.
Lock in a forward exchange contract
If you don't have enough funds available but want to secure a certain rate now, you can enter into a forward contract. This ensures that you get the lowest rate and the ability to purchase or sell your currency now, at the prevailing rate.
Settlement for the transaction happens on a pre-determined date in the future, up to X months depending on the conditions of the contract. Typically you'll be asked to provide a deposit, usually a certain percentage to be held as security to finalise the transaction. When the contract is implemented, you'll be required to send the remaining balance on date stated in your forward exchange contract.
A forward exchange contract is similar to a 'agree now, pay later' situation where you can lock in an exchange rate even if you don't have the money available. If rates go down then you won't be affected, but you may lose the deposit that you put in depending on the conditions of your contract. However, if rates improve and go beyond what you locked yourself in for, you may not be able to change your contract.
Use a service that is fit for the amount you're sending
A lot of transfer companies waive their fees if you transfer over a certain amount. If you're transferring large amounts, around the AUD $10,000 mark, it may be best to use a transfer company. For smaller amounts (running into the hundreds), you may want to use a bank transfer or similar, such as PayPal or a Citibank Plus transaction account.
Are free international money transfers real?
It's unrealistic to expect truly free international money transfers are real. Even though international money transfer companies are cheaper than the banks, they tend to take a smaller margin or charge smaller fees. While international money transfer companies stand to make money from your international transfer, they still make less profits than the banks.
International money transfer companies usually charge a margin on top of the market rate and may charge fees for smaller transfer.
In some cases, to get a truly free transfer, you'll need to transfer large amounts above the $10,000 mark. This is because international money transfers actually save money when you transfer big amounts, due to economies of scale.Back to top
Please note that the process is different for every provider. The example below shows just one of the way you can initiate a transfer. Log into your account and choose the 'international money transfer' option. Choose which country you'd like to send the funds to. You will also need to know your recipients SWIFT/BIC code, account number and account name. In most cases, you will also need to provide the recipient's residential address and phone number. Choose which transaction account that you'd like the funds to come from. Here is another version of what it could look like on your screen (Citibank).
How do I transfer money to India?
- What fees are involved?
- How expensive are the charges for sending and receiving the funds?
- If you want to send money quickly, can you do so for an extra charge?
- Can you avoid some of the fees by sending a larger amount of money?
Then there's exchange rates to consider. Are you getting the best possible deal on rates? Read the fine print before you commit so you know exactly how much of your money will make it to its destination. Most importantly of all, is your chosen method to transfer money to India safe and secure?
Use a trusted and reliable provider to make sure your money arrives without any problems. One option is to send an international money order, which involves getting an international guaranteed cheque from your bank or post office. This method is a secure way to transfer funds, but it will take longer than electronic options and could be costly.
You can transfer money directly from your bank account to an overseas account, which has the advantage that you're already a customer so you don't have to sign up to anything and you know the transaction will be handled by a financial institution you trust. Remember, though, that there are fees involved, the transfer may take time and margins on exchange rates can significantly reduce the amount of money that ends up being transferred.
You could also consider doing a cash transfer through companies like Western Union, where whoever you send the money to will be able to collect the funds from the money transfer office in India. Western Union has more than 50,000 agent locations in India and the money arrives quickly, but make sure you're aware of the fees involved. Finally, there are a number of online money transfer companies who can transfer the money for you.
As mentioned above, transfer between $2000 and $9999 via OFX and you'll pay a flat $15 fee. Make sure to compare exchange rates between different providers. Alternatively, companies like Remit2India specialise in money transfers to India. Once again, fees vary based on the amount of money sent and the mode of transfer chosen. A fee of $6 is charged for transfers between $50 and $500, while service charges starting at 34 Rupees will apply for each transfer.
For a useful comparison of the costs involved in sending money from Australia to India via different means, check out SendMoneyAsia - a website run by the Australian government.
How do I send money overseas using the post office?
Australia Post lets your transfer money overseas using the services of Western Union. You can initiate the transfer online or at your local Australia Post that has Bank@Post facilities. If you do it at the post office, you'll need to request your transaction and pay for it.
You'll need to show photo ID and send any amount up to AUD $7,500. You'll be given a Money Transfer Control Number (MTCN) so you can track your transfer. You can only use your debit card or cash to pay for the transfer.
Remember to inform your recipient that money will be available to collect within minutes, though funds may be delayed based on factors such as the amount sent, destination country, currency available and regulations. Your recipient can pick it up at their local Western Union Agent. For bank to bank transfer, you can inform your recipient that the money will be available within 2 business days.
How do I send money overseas using my credit card?
You'll find that most institutions won't let you send money overseas using a credit card. In most cases you'll need cash, a debit card or a transaction account. Note that if you can send money using a credit card, it is a expensive option and should be avoided if you can use alternative methods.
This process is essentially a cash advance which means that you'll be charged a cash advance fee and be charged the interest rate on cash advances from the moment the transaction is processed. To check whether it goes through a cash advance or a purchase, speak to your bank or transfer service.
How do I send money using PayPal?
Head into the relevant PayPal site and you'll see a box similar to the one pictured below. Choose your country, amount you'd like to send and the currency. You'll also need your recipient's email address that is linked to their PayPal account. The final step involves you logging into your PayPal account so you can send the funds through.
Choosing the best option to send money overseas can seem a little daunting at first, but if you do your research and shop around, you can transfer your funds quickly and efficiently - and save money along the way.