Top Mistakes Expats Make When Transferring Money to Australia
One of the biggest financial issues you will have when moving to Sydney is finding the best way to transferring money to Australia. The last thing you want is to erode your wealth and return home poor. So to ensure you remain living abroad and loving your new life, here are five mistakes expats can avoid when it comes to money.
Paying High Transaction Fees When Transferring Money
The best way to transfer your money when moving to Australia is with a foreign currency specialist rather than a bank. (OFX, formerly Ozforex, has generously offered SMG readers free money transfers for life. Please take advantage of this offer and other services such as locking in your exchange rate.)
Banks will charge you up to £40 per transaction and over the course of your expat time, these fees can certainly begin to accumulate. For example, two transfers a month can lead to £1,000 in fees alone. Transacting through a specialist currency company can substantially reduce the fees. Fees won’t be eliminated altogether but many currency specialists provide free transfers above £2000 (GBP equivalent).
You’ll also get a better foreign exchange rate, this can be up to 4.0% which, if you transfer a large sum of money, can add hundreds or thousands of Australian dollars to your total. Since Sydney is an expensive city to live in, making sure you have as much money as possible will make the relocation easier, plus it’s your money you shouldn’t have to pay to have it in another country.
The ‘Actual Exchange Rate’ When Transferring Money to Australia
When transacting with a bank or foreign exchange broker, always benchmark the rate offered with the ‘actual exchange rate’ as this will give you a clear understanding of whether you have been offered a good or bad deal.
Remember you are the customer and have a choice, so make sure you are quoted inside 1% of the actual exchange rate, if not compare to other competitors. Other foreign exchange retailers can give you extra currency on larger transfers, which is ideal when you’re relocating to Australia, and exchangers now promote a price promise.
If you find a cheaper price elsewhere, they’ll refund the difference. Also a foreign currency specialist will usually offer more help on the exchange rate and transfer process compared to a bank.
How Much Money You Bring to Australia With You
It can be very tempting to take everything out of your bank and bring it with you when you move to Australia, but I must warn you that it is not safe to bring large sums of money with you.
Of course, you need to ensure you have enough money with you to support yourself when you first arrive. But it’s recommended that you have roughly $1500 to $2000 for the first two to three weeks to pay for accommodation and transport. The rest you should either transfer or use Traveler’s Cheques or an International Credit Card, as Traveler’s cheques can be cashed at any bank or currency exchange in Australia.
If you’re carrying $10,000 or more in cash, then you must declare in when entering Australia or you could be arrested and the money is taken off you, and no one wants that.
Whereas, lost credit cards or traveler's cheques can be replaced and they don’t expire so can be used at any time.
Lauren: Just wanted to say that I have another article that covers how much money you will need to be saved for your move to Sydney. It will help you sort out your savings as it will obviously be different for everyone. Some people will need more than $2,000 with them when they arrive in Sydney.
Forward Contracts and Locking in Your Rate of Exchange
You need to protect yourself against any sudden changes in the foreign exchange rate, to do this you can use what’s called a forward contract.
Forward contracts can help you reduce the risks of fluctuations. They fix the exchange rate at a certain time, so even if the rate changes your contract guarantees that you will receive the rate you were offered.
For example, if the pound rises to 1.76 against the Australian dollar, with your forward contract you’ll receive 1.76 even if the pound later falls to 1.46.
There are two types of contracts, fixed forward contracts and open forward contracts. In a fixed forward contract, you take delivery of your currency on a specific date that you choose, giving you complete control. An open forward contract is where you can draw your currency at once, or in different amounts at different times when you need them all at the fixed rate you were offered.
Don’t Settle For the First Deal!
The payment system has matured and there is an ever-greater choice for you to choose from when looking to transfer money to Australia.
Don’t settle for the first deal you may stumble across, and if it comes to it don’t underestimate the power of good old-fashioned haggling either!
Businesses never want to turn away business, so don’t hesitate to suggest a counteroffer to your supplier. You honestly will be surprised at the lengths organizations go to sustain the business, and what’s the worst that can happen, that they can say no.
Once again, OFX forex exchange specialists have a special promotion offer for Sydney Moving Guide readers: Free Money Transfers for LIFE. Click here to find out more and take advantage of this offer.
Disclosure of Material Connection: This is a “sponsored post.” The company who sponsored it compensated me via a cash payment, gift, or something else of value. Regardless, I only recommend products or services I use personally and believe will be good for my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
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Lock-In Your Exchange Rate
Did you know the Australian dollar is a commodity currency? This means the value of the Australian dollar is linked to the price of iron ore and other Australian exports. It also means that it's HIGHLY VOLATILE! When a good rate comes along, you need to be ready to jump on it and lock-in that exchange rate.
Have You Started Packing Yet?
No, not yet? Still got several months to go? Ok, but have you at least started thinking about what you're taking? Maybe even started a list? The truth is you don’t need to know what's going with you before getting your shipping quote. Why? Scheduling a shipment to Australia can take as long as 6 months.
Open Your Bank Account
In 5 minutes or less, you can open both a checking and savings account BEFORE you move to Australia. There are only 3 things you need to get started.
1. Your passport and visa details.
2. Know where you're going to live.
3. Be arriving within the next 3 months.
*This link will take you to Commonwealth Bank of Australia's special accounts for newly arriving expats and migrants. Commonwealth Bank is a sponsoring partner of Sydney Moving Guide.