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No Fees Ever When Transferring Money to Australia
The one takeaway I wish everyone who visits Sydney Moving Guide leaves with is this…
DO NOT transfer money to Australia with your bank.
Bank-to-bank international transfers are THE WORST.
The best way to transfer money to Australia is with a forex broker,
ESPECIALLY when transferring a large sum.
(More on locking in an exchange rate below.)
Full disclosure: I've been a partner of OFX since 2015 and have referred over 4,000 people.
I've never heard a negative word about OFX.
Are they the only option for transferring money to Australia?
No. There are heaps of forex brokers. I'll list few worth checking out, and a few that are not, below.
What to Know BEFORE Transferring Money to Australia
OFX specializes in one thing only, foreign currency exchanges. It's all they do, every day of the week, since 1998.
Banks charge transfer fees, often from both banks, plus a percentage per exchange.
When transferring money with a bank, you have no control over when the exchange will happen. Thus, you have no control over the exact rate of exchange.
Banks DO NOT consider the volatile nature of the Australian Dollar when they set their daily exchange rates.
OFX can often beat the banks’ exchange rate by over 3% because they have substantially lower margins than a bank.
Since you're a Sydney Moving Guide reader, you'll get free money transfers for LIFE!
With OFX, you can lock in an exchange rate and it's FAST! For more frequently traded currencies – USD, EURO, and GBP to AUD – it can be as fast as the next day.
It's 100% FREE to open an account.
How does OFX know that I referred you?
You'll see pid=3637 in the website address. That's how OFX knows that I referred you.
The free transfer promotion will take effect after you've set up your account.
We Didn't Transfer Money With OFX When We Moved to Sydney.
Ok, so this is a bit embarrassing, especially after such a build-up.
I'm hoping that it will help clarify why you should NOT transfer money to Australia with a bank.
We didn't use OFX when we moved to Australia because we had never heard of it or know what a forex broker was or did.
In fact, we didn't hear of OFX until several years after we moved.
Instead, we did exactly what I'm telling you not to do.
We even paid bills back home using international bill pay through our bank in Australia.
Worst idea ever.
It wasn't until my dad passed away and left me a small chunk of money that I heard of OFX.
Even then, it was too late.
It wasn't winning the lottery kind of money, but it was large enough to leave a sting when I found out the exchange rate I ended up getting.
As you can imagine, it was pretty awful and not something one thinks about when moving overseas.
The travel alone from Australia to Ontario was exhausting, with way too many layovers. Then there were endless loose ends and what seemed like piles of paperwork to sort through.
Since I was only in Ontario for a limited amount of time, everything needed to be buttoned up and finalized quickly.
I think I slept for two days straight when I finally got back to Sydney.
It took over a week, after I got back, for the money to show up in my bank account back in the States.
If I had been smarter, I would've transferred the funds from Canada directly to Australia using a forex broker.
If I was even smarter yet, I would have asked a forex broker to set up a Limit Order and locked in an exchange rate.
But I wasn't that smart.
Instead, the money got transferred from Canada to the US, then to Australia.
All bank to bank to bank.
That's two lousy bank exchange rates plus additional percentage fees per exchange. Each whittling down the amount transferred even more.
It was just so damn easy and at the time, easy was all I had energy for.
All I had to do was go online, enter my bank account details, the amount I wanted to transfer, and then click confirm. Done.
That's what the banks are counting on. It's sooo convenient.
The money is already at the bank. Why open another account somewhere else? It's going to end up at the same place, right? So why not cut out the middleman?
Is there really that much of a difference between a bank's exchange rate and a forex broker's?
And the Australian Dollar can't be that volatile? The difference from day to day isn't that much, is it?
Even so, we're talking about one-thousandths of a point or one ten-thousandth of a point. What difference is that actually going to make?
Bank Exchange Rates vs. Forex Broker Exchange Rates
When transferring money, a difference in one-thousandths of a point or one ten-thousandth of a point in an exchange rate can be $100s to $1000s of dollars, pounds, or euros.
Within 24 hours, the Australian Dollar can change quite a bit.
For example, on July 6, 2021, at 12:00am, the US Dollar was worth 1.3181 AUD. Almost ten hours later, at 9:40 am, the US Dollar was worth 1.3359 AUD.
I know that doesn't seem like that much, and if you're transferring a $1,000 USD, a difference of $17.80, it isn't.
It's when transferring larger sums, such as $100,000 or more, that those differences start to add up to thousands. In this case, a difference of $1780 AUD.
And remember, that was within ten hours, during a single day that I picked out of thin air.
Did you notice the time stamp above? The better of the two was at 9:40 am?
You can be that specific when you transfer money with an OFX Limit Order.
With a Limit Order, you set a target rate of exchange.
Once that target is reached, your transfer is triggered to go through no matter what time of day.
Banks set daily exchange rates that do not consider the volatile nature of the Australian Dollar within a single day.
Some banks fix their exchange rate in the morning, with no chance of adjustment no matter what happens to the currency markets during the day.
So don't Google the exchange rate and think that's the rate you're going to be getting on that day. It's not.
With a bank-to-bank transfer, you will have little to no control over when your transfer actually happens.
You also won't know what the exchange rate will be until the exchange has already gone through.
Sure, a bank has an easy-to-use form for you to fill out with a confirmation button at the bottom, but your transfer doesn't happen the instant you click confirm.
The only thing that the confirmation button does is send a notification to start the process.
Interbank Exchange Rates and Profit Margins
A bank's exchange rate is based on the bank's rate when trading with other banks or large financial institutions. This is why bank exchange rates are often referred to as interbank rates.
Banks also charge up to a 5% margin on that interbank rate when transferring money.
So essentially, the bank paid 5% less for the currency than what it's “selling” it to you for. Think of it as a wholesale rate vs the retail rate they will offer you at a 5% markup.
When I transferred the money from my dad, bank to bank to bank, not only did I get hit with two lousy interbank exchange rates, there was that percent margin on top of each one plus transfer fees. Yeah, it sucked.
Have you seen the Harry Potter movies? Remember the goblins that run Gringotts Wizarding Bank?
That's who I imagine handles all foreign currency transfers that happen at a bank.
Rows of goblins, sitting at their desks counting stacks of coins. Every time someone clicks that confirm transfer button, they all start giggling.
What Makes OFX and Other Forex Brokers Different.
OFX's margins are substantially lower, saving you money on top of that lousy interbank exchange rate.
The currency brokers at OFX also know the foreign exchange market.
They know when to buy and when to sell. It's the only thing OFX does, and they're good at it.
After you set up your account and get that follow-up email or call from an OFX currency broker, be specific. Not specific down to the penny, but as far as timeline and approximate amount.
The more they know, the better they can help you with when to make your transfer for the best exchange rate.
(BTW – There are no pennies in Australia. The smallest denomination coin in Australia is five cents. It will take you about a minute to get used to. Then when you're back home, you'll wonder why there are still pennies.)
A bank doesn't care what your plans are when it comes to transferring money.
Most likely, you have several months before you'll need to transfer any money to Australia. Even so, the sooner you start paying attention to the exchange rate, the better.
The Australian Dollar Is a Free-Floating, Commodity Currency.
The Australian Dollar has been a free-floating currency since 1983.
Before that, it was pegged to the US Dollar. And before that, it was pegged to the British Pound.
When a currency is pegged, it means the “government sets a specific fixed exchange rate for its currency with a foreign currency or basket of currencies.”
Now that the Australian Dollar is no longer pegged, it's free-floating, so off doing its own thing and no longer fixed to the US Dollar.
The Australian Dollar is a commodity currency.
This means the market value for the country's natural resources such as iron ore, gold, coal, and agricultural exports will affect the exchange rate. So the price of iron ore will affect the exchange rate. Or weather conditions that damage crops.
The interest rate set by the Reserve Bank of Australia (RBA) will also affect the exchange rate.
What does this mean to you?
Well, for one, it means that it jumps around more than the US Dollar, British Pound, or Euro.
Two, you'll need to start paying attention to things like when the RBA announces a change in interest rates. For example, in 2020, the RBA cut interest rates three times to record lows.
With OFX, you can set up Market Rate Alerts that will keep you in the loop. Yet another thing that banks don't offer.
If you have a news app on your phone, you might want to add Australia and Forex to the topics you follow.
No Transfer Fees Is Nice, but It's Just Icing On the Cake.
The real magic when transferring money with a forex broker is locking in a rate of exchange.
This is what I should've done, but I didn't because I never heard of OFX.
At a BBQ the weekend after I got back, friends of ours, a couple that moved to Australia from the UK, told me about OFX.
Well, they didn't really tell me about OFX. It was more jumped up and down, shouting at me.
Trying to keep things casual and brief, I mentioned that it was good to be back and have the “hard part” mostly done except for one last piece.
Transferring the money from my US bank account to Australia.
That's when the jumping up and down started.
Wait. No. Stop. Don't. Cancel it now!
They were smart and had done their research. They knew there was a better way.
After living in Sydney for a few years, our friends decided they weren't moving back to the UK. Australia was home.
It was a big decision.
Part of this decision involved moving over all of their financial assets to Australia. This included selling their house in London so that they could buy a new place in Sydney.
I don't know if you know anything about real estate in London, but it's pretty damn expensive. I don't know the specific amount they sold their house for, but I think it's fair to say that they were transferring winning the lottery sort of funds.
Unlike me, they took the time to research the best way to transfer money overseas.
They set up accounts with a couple of forex brokers and chatted with each one about the best to move their money.
As in call on the phone.
Not emailed back and forth or text through an app, but got on the phone and talked to a real person.
That Kind of Customer Service Is Something You Won't Get With a Bank.
Sure, you can call the bank's customer service hotline. They may even transfer you to one of their currency exchange goblins, but it's unlikely.
With OFX, you'll be on a first-name basis with one of their currency brokers who are there to answer all your questions.
No, you don't have to transfer a large sum of money to get personalized service.
OFX's customer service, available 24/7, is the first layer of the cake with the no transfer fees icing.
While OFX currency brokers are an excellent resource for understanding trends in the currency markets, they cannot give you explicit financial advice. So how much to transfer is up to you.
Be sure to ask about all your options and the restrictions, especially time restrictions.
OFX currency brokers are there to help with minimizing risk and optimizing the timing of your transfer.
Unfortunately for me, I had already click that confirm transfer button, and the bank goblins were rolling on the floor laughing.
Our friends even insisted I get on the phone with my bank back in the US, right there and then, to try and cancel the transfer since I could still see the money in my account.
Nope, it didn't work because the process had already started. There was no backing out.
The whole thing was frustrating.
The calling, getting transferred, then waiting just to find out what I already know was going to be a no.
I was also frustrated with myself for not even thinking of doing any research beforehand. I mean, I Google everything, especially big money decisions. Why not this?
I hate it when I catch a case of the should-haves. They can be hard to shake.
But, on the brighter side, it sure as shizzle wasn't going to happen again.
And that international bill pay we had set up with our bank in Australia? That came to a complete stop.
Transfer Options and Locking In a Rate of Exchange
Disclaimer: I'm not a currency broker. The information below is not financial advice. Ask whatever forex broker you decide to work with for more detailed information. Not all forex brokers use the same terms or offer the same options. Be sure to ask about any restrictions, such as time restrictions and minimum/maximum transfer amounts.
Limit Order (Target Rate Transfer)
I've already mentioned setting up a Limit Order a few times as a way to target a specific exchange rate. This option would have worked for me because I didn't actually need the money to be transferred asap.
And if I had known that I could set a target exchange rate, I most certainly would've been more patient.
Limit Orders aren't open-ended.
With OFX, a Limit Order is valid for up to six months. I'm not sure about other forex brokers, so you'll need to ask.
Once you've set up a target rate transfer, it will execute automatically.
There's usually a minimum amount you can transfer with a Limit Order.
For OFX, it's $1,000 USD, but please double-check that. I'm not sure about other currencies.
Combo Platter: Limit Order and Stop Loss
You can combine a Limit Order with a Stop Loss Order if you're concerned that the exchange rate will drop.
The Stop Loss Order will be triggered if the exchange rate drops to a specified rate you set when you place the order.
The benefit of using these together is you can set your transfer to happen when the exchange rate is within a specific range.
Use caution when setting these up together.
Remember, the Australian Dollar is highly volatile and jumps around quite a bit throughout the day.
Ask the currency broker about setting these up together since they are triggered automatically. You don't want the Stop Loss Order to go through before your Limit Order target rate even has a chance.
A Forward Contract is probably the most commonly used way to lock in an exchange rate. But when they say locked in, they mean locked in.
Essentially you're buying now at the current exchange rate and transferring later.
If a better rate comes along, you can't back out because you've already bought your rate. That's also true if the exchange rate drops, which is the primary benefit of a Forward Contract.
This is also why you want to start watching the currency market sooner rather than later and get your accounts set up.
Every forex broker sets their own terms as far as when you have to complete a Forward Contract transfer.
With OFX, you have up to 12 months. Some forex brokers will give you up to two years.
The benefit of Forward Contracts is knowing exactly how much money you'll be transferring to Australia before you move. This is helpful when budgeting how much you're going to need when you arrive.
A Spot Contract is most frequently used for transferring money overseas, but you can't lock in your exchange rate and transfer later.
Think of it as an on-the-spot exchange. You'll still get a more competitive exchange rate with a forex broker than a bank-to-bank transfer with a Spot Contract, even though you can't lock in a rate.
Remember My Friends That Sold Their House in London?
They split up their transfer. This way, not all their eggs were in one basket.
They locked in a rate with both a Limit Order and a Forward Contract. They figured out a percentage of the total for each that they were comfortable with.
Of course, this meant that not all the money would be transferred on the same day, but that wasn't an issue for them.
They also transferred money from the sale of their house with a Spot Contract only because they wanted access to some of the money right away.
This might be something to consider when you move.
Again, I'm not giving financial advice here. I'm only letting you know that it's possible.
There is one catch.
You'll Need to Open a Bank Account in Australia to Receive the Money.
This is especially true for a Limit Order because it's triggered automatically. You'll need a destination for that transfer.
There are few banks in Australia that you can open an account with before you move. These bank accounts are simple, starter checking and savings accounts.
Most expats start with them then transfer over to better banking options with higher interest and lower fees. Unfortunately, you'll need to be present in Australia and have established bank accounts before you can do this.
Sorry, that's just the way it is.
Opening Your OFX Account.
There is no cost or obligation to open an account with any forex broker.
The truth is every expat living in Australia has a few forex accounts. So will you.
I'll list a couple of forex brokers that you might want to consider opening an account with, in addition to OFX below.
But first, let's cover how to open an account with OFX, as it's pretty much the same for all brokers.
The OFX registration process takes no more than a few minutes.
You'll need to fill in a few personal details like your date of birth, current residential address, occupation, and contact details.
Yes, they ask for your phone number, and they will most likely call you to ask what your plans are and when you're thinking of transferring money.
The majority of the time, OFX can verify your identity electronically. But sometimes, they need additional proof of ID.
They'll mention this on the phone and walk you through the process. Usually, they'll ask you to upload a photo of your driver's license or passport.
Super easy to do.
After that, your account is active and ready to go.
Important Note: Bank-to-Bank Transfers Only
When you set up your OFX account, you'll notice this note at the bottom.
“Bank to bank transfers only. No cash transactions or FX trading.”
This has caused some confusion.
All it means is you're setting up a personal account, not a business account or a foreign currency trading account for large volume trading.
The bank to bank transfers only means that the money will be transferred to OFX from your bank account back home to a bank account in Australia.
So not your PayPal account or Venmo or a credit card.
Some forex brokers or other foreign exchange companies do allow you to use a credit card.
The money must be transferred from an accredited, registered bank to an accredited, registered bank. They don't care where the bank is located. It just has to be a bank.
Is Transferring Money With a Forex Broker Safe?
Always, always ask if the forex broker is compliant with local regulations.
For example, OFX is registered as a Money Service Business with the US Treasury's Financial Crimes Enforcement Network.
In the UK, OFX is authorized by the Financial Conduct Authority (FCA). And in the EU, OFX is regulated by the Central Bank of Ireland to operate as an Electronic Money Institution (EMI).
Most forex brokers will state that they are a member of a regulatory body at the very, very bottom of their website, in fine print.
Forex Brokers to Check Out and Compare.
All of the forex brokers listed below are all sponsoring partners of Sydney Moving Guide.
No transfer fees and 0% commission. OFX has eight international locations.
Also, no transfer fees and 0% commission. TorFX is based in the UK but can help anyone, anywhere, with transferring money overseas. TorFX is smaller than OFX or XE, but this is a good thing for customer service.
A small fee for transfers under 500 USD, GBP, or Euro. The largest out of the three. The advantage to this is they are often the fastest for international transfers.
Not Recommend for Transferring Money
Ok, so now you know why you shouldn't use a bank to transfer money to Australia, but don't use your PayPal account or the ATM when you arrive.
Yes, you can send money to another PayPal account instantly regardless of the difference in currency. Still, there are transaction fees, and the exchange rate is not very good.
For sending more significant amounts of money, this is definitely not your best option.
Of course, you can withdrawal money from your bank back home at an ATM, and chances are you probably will a few times.
I would not recommend withdrawing your daily limit, then walking into your bank in Australia and depositing the money. Then doing it all over again the next day and the next day, until you've transferred all your money.
That's just silly.
You'll also get the worst exchange rate plus possible service fees and pay a percentage of the amount you've withdrawn on top.
I've read this many times on several different expat blogs.
You can schedule regular transfers with OFX if you have money coming in monthly, such as rental property income from back home.
Or schedule regular transfers back home for bills that you need to stay on top of, like a school loan payment.
Before you move, do check on ATM fees for international withdrawals.
Also, check on international fees for your credit cards too.
Bank Holidays Back Home and Overseas.
When transferring money overseas, always check on the bank holidays in both locations.
Each state and territory in Australia observe different bank holidays.
Bank business operation days are Monday thru Friday.
But don't forget the international date line.
So Friday in the UK or US is Saturday in Australia.
Some Australian banks are open on Saturday until noon, but international transfers will not go through until Monday.
Start Sooner, Not Later
Not sure when you're moving to Australia? Getting started with organizing your finances is something you can do months before you move.
I have a few other posts you might want to read.
- How much money do you need in savings when you first arrive?
- How much does it cost to move to Australia?
- Do you owe tax on the money you transfer to Australia?
Oh, BTW, a little bit of Harry Potter movie trivia for you that ties in nicely.
The interior of Australia House in London was used as the interior of Gringotts Wizarding Bank for the movies.
I had no idea.
I found out when I Googled the name to double-check my spelling.
Seriously, I Google everything. Why didn't I Google what the best way to transfer money was? That still gets me.