Money tips when moving overseas
Whether you have just landed a job transfer, are off on a backpacking gap year adventure, packing up to study abroad or decided to emigrate to the far corners of the world, one thing you’ll want to do right is move your money across borders in the most cost effective way possible.
This guide will run you through some of the key aspects of international money transfers so that no matter what your own financial and travel situation is, you’ll be informed of your choices.
Short term overseas move
If you are moving overseas for less than 12 months and you plan on returning to Australia, it is important to make sure that you’ve got a range of money options and that those options mean you won’t be paying a tonne in overseas fees.
If you are only temporarily moving overseas, for instance if you are backpacking or studying overseas, then it is likely that you’ll want to keep your bank accounts open in Australia so that you can keep the bulk of your money in AUD and exchange it into foreign currency at a time and in amounts suitable to you.
Best money options:
- Credit card. Prior to leaving, get a credit card that has no international transaction fees or allows you to accrue rewards points on international spending (as long as you can pay your balance off in full each month). Credit cards are accepted around the world and are a convenient and easy way to make payments in foreign currency. But currency conversion fees can be as high as 3% so while this isn’t a big expense when you are on a two week holiday, it can be a big expense over 12 months. If you are going to use a credit card for making payments, find one that has low or no international transaction fees. And be sure that you set up internet banking prior to leaving overseas so that you can make any card repayments easily. Compare travel credit cards here on Mozo.
- Debit / ATM card. Overseas ATM fees can be as high as $5 per withdrawal so look for a debit card or ATM network that will have low fees. To cut down on these costs, withdraw higher amounts of money.
- Prepaid travel card. You can load up foreign currency on to the card prior to leaving which means you can lock in your exchange rate and then use the card to make payments when you are overseas like a regular debit/credit card. Many prepaid travel cards are reloadable so you can top up the balance while you are away, but some will have reload fees which are charged at a percentage of the reload amount, so you will need to factor this into your exchange.
- International money transfer. When you arrive at your overseas destination, it’s likely that you’ll have a number of large expenses like purchasing furniture / household items, paying rental bonds, or buying a car. Paying for these by credit or debit card will not be the most cost effective option so an international money transfer (IMT) could be the way to go. Many banks will offer this service via internet banking but there are specialist foreign exchange providers you can choose as well. You’ll need to have a bank account set up in your new place of residence as well as an account set up with the IMT provider to transfer your funds. You can make a one off transaction or set up regular payments from your Australian account. These providers have some of the most competitive exchange rates and lowest fees around, which means you’ll get more foreign cash for your AUD than if you go with a standard bank to bank transfer.
Long term or permanent relocation
If you are planning on moving overseas for an extended period of time or permanently, then your overseas money needs are going to be different. You will still need cash or access to money when you first land, so having a credit card and debit card is an essential. When it comes to moving the bulk of your cash assets, ensure you are across the various international money transfer product options so that you get the best exchange rate for your needs.
Here’s a look at some the different product options available through international money transfer providers:
|Spot rate contract||The current price (or spot rate) which the currency is trading at that time. |
This is the most common service offered by IMT providers and banks.
|Small to medium size transfers or one off large payments. |
You choose the date and amount of the transfer based on the exchange rate at the time.
|Forward contract||This is where you fix an exchange rate that will apply to a transfer up to two years in the future.|
Used to help protect against possible currency fluctuations.
|Large payments, such as purchasing property where you need to have a fixed amount transferred on a set date.|
|Limit order||Allows you to specify a rate at which you will want funds to be transferred. ||Non specific payments. Allows you to transfer money across when exchange rates are in your favour. |
You don't have to keep track of rates, as your provider monitors and will transfer money on your behalf when the currency hits your desired exchange rate.
Just bear in mind that once your target rate has been triggered, the transfer is locked in so you won't be able to change your mind.
Setting up an overseas money transfer
Regardless of how much money or how often you will need to transfer money, you will need to have an account set up with an international money transfer provider. This can be done easily online and requires identity verification so it is important that you do this well ahead of the actual day that you want to transfer funds.
Once you’ve got an account set up, transferring your funds can be done easily via the online platform. If you’re transferring a large amount (over $10,000) or want to access additional transaction options such as a forward contract or limit order, you might need to speak with one of the traders to organise the transfer.
You will need to ensure that you have a bank account set up in your new place of residence so that the funds can be successfully transferred to this account if you are transferring money for personal reasons. However, if you are making a direct payment to a business or other person, here’s what you’ll generally need to include:
- Full name, address and account number for the person you want to send the money to (not a post office address)
- Currency and amount that you want to send
- The IBAN or bank account number
- A SWIFT code or BIC (this identifies their bank) or the full bank address
- Any other information they have like sort codes or routing codes