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The other way the banks are slugging you

Travelling abroad soon? Then don’t dream of using one of the big Aussie banks to transfer money overseas.

The ‘big 4’ banks are slugging their customers on international transfers, charging exchange rates that are far higher than online operators like XE, World First and OFX.

Ditching the high street banks and using any one of the many online money transfer operators that have sprung up over the past number of years, could save you hundreds of dollars. That leaves you with more money to spend on your trip.

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Analysis by shows if you were transferring A$10,000 into USD$10,000, you could save A$650 by using the super competitive rates offered by non-bank alternatives.

If you want to convert A$10K into euros, you’ll get only an average of EUR 5914 from the big Aussie banks, but EUR 250 more if you go with an online service.

“When it comes to international money transfer rates we found a huge gap between the big four banks and the best value online services,” says Mozo Director Kirsty Lamont.

“Whether you are sending money to family overseas or conducting business internationally we found the big banks were 4.7% more expensive on average than the smaller providers.

This writer also ditched her Aussie bank when transferring money overseas, after a tip-off from a friend (who works in one of the big banks!) about cheaper online currency exchange alternatives. I have never looked back. As well as transferring the money directly into your overseas bank account if you have one, they charge a fee of around $15, if its under A$10,000. TransferWise is also another service that is proving extremely popular offering uber-competitive exchange rates, and you can even set up a ‘borderless’ bank account.

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The findings come as the World Bank recently named Australia as one of the most expensive G20 countries for international money transfers – behind only Canada, Japan and South Africa.

Aussies pay 7.7%, on average, on a US$200 transfer, well above the global average of 6.94%.

However, there may be hope on the horizon.

The Australian consumer regulator, the ACCC, is set to investigate uncompetitive pricing on foreign currency conversion charged by the major players.

Tips for transferring money (courtesy of Mozo):
    • Compare exchange rates. A more competitive exchange rate means you’ll get more foreign currency in exchange for your dollar.
    • Consider transfer speed. Money transfer specialists can process transfers in as little as 1-2 days, while the big banks could leave you waiting up to 5 days. It’s important to check the processing time, whether it can be reduced if necessary, and if that will cost you.
    • Suss out the transfer limits. Find out if any limits apply such as minimum or maximum amounts you can transfer either in one go or over a month.