How To Get The Best Exchange Rate – Bank vs Currency Broker
How To Get The Best Exchange Rate – Bank vs Currency Broker – Transferring money between countries and currencies is almost a daily occurrence for Australian expats. These transfers could be to pay for school fees, make mortgage repayments or just to build up your savings back in Australia. However, how do you know if you’re getting a good deal when you exchange currencies?
More often than not it’s just too easy to log into your internet banking account, clicking a few buttons and that task is done but have you ever worked out what that ease of access maybe costing you? Australian and international banks make a lot of money out of offering this ease of access and it is easy to see why. Sometimes the difference between a bank and a currency broker can be up to 5%.
What Is A Currency Broker?
A currency broker is a financial institution that is regulated like a bank but that is all they do – currency exchange. Where they are different to a bank is that instead of everything being on one internet banking login you will need to setup a separate account with them. This is no different than setting up a normal bank account and you will need to provide the required identification.
When you are ready to transfer the funds you login to your currency account with the provider that you have chosen, type in the amount that you would like to transfer and you will be provided with an exchange rate. If you are happy with the exchange rate you accept the offer, nominate the account that you would like the currency to be paid into and then you will transfer those funds into the nominated providers local account.
For example if you chose OFX as your provider and you live in the United States then you will transfer the funds into OFX’s US bank account. OFX will then arrange for the conversion to Australian dollars and the funds will be deposited into your Australian bank account in 1-3 days.
As you can see after you have gone through the process of setting up an account the process is quite simple.
How Do I Choose a Currency Broker?
With so many currency brokers to chose from we are often asked how do I choose the right one for me. Below we have listed our top 5 tips on choosing a currency broker.
- Are They Regulated? – ensure that the broker you choose not only is regulated in the country that you live in but Australia as well. By being properly regulated you will receive consumer protection in both jurisdictions should anything untoward happen with your money. At Atlas Wealth Management we work with OFX and WorldFirst who both hold Australian Financial Services Licenses (AFSL), are Canstar rated and are members of the Financial Ombudsman Service (FOS) should you need to raise a complaint.
- Competitive Rates – whilst its important that your provider is properly regulated it’s also important that the rates they provide are competitive. In today’s internet age its very easy to see if this is the case or not.
- Good Customer Service – for the majority of times your transfer will be hassle free however there are times where you will need to speak to an account manager or some sort of customer service. Make sure your provider offers this option as not everything can be done on the internet or over an email.
- Jurisdiction – not all currency brokers operate in every country so find out if you can setup an account where you live. Generally speaking the larger the broker the greater the coverage so shop around.
- Platform – make sure your provider provides an easy interface for you to be able to make the transfer. If it’s hard to use you’ll find yourself going back to using the bank and that will only cost you more money at the end of the day.
How Do The Currency Brokers Fair?
Currency brokers will provide different rates depending on the amount you are transferring. Some specialise in smaller transfers whilst others provide better rates on larger transfer amounts. We wouldn’t recommend setting up an account with all of them but maybe selecting one or two providers who consistently provide good rates combined with the other top tips above.