Aussies losing out on currency exchange
According to new research from Capital Economics, moving money abroad is becoming unnecessarily expensive and Aussie’s don’t really understand all the costs.
The study, commissioned by International Money Transfer (IMT) provider TransferWise, revealed that Aussies spent $3.9 billion on foreign currency fees in 2016 - $3.1 billion of which was in exchange rate markups and overseas card spending charges.
While the average Aussie is spending $167 each year in fees and additional costs to banks and currency brokers it turns out that just 63% of us actually understand where our money is going.
TransferWise Co-founder and Chairman, Travis Hinrikus believes Aussie consumers are being conned when it comes to spending their money overseas.
“Most banks tell their customers that they only pay a small upfront fee for international payments. But in reality customers pay much more. Huge hidden charges are taken in the form of the terrible exchange rates, often without the customer realising,” said Hinrikus.
The research found that - between exchange rate markups on cash exchanged before travelling overseas, exchange rate markups on card purchases overseas and charges for cash withdrawals overseas - Aussie travellers spent $1.1 billion exchanging currency in 2016.
But it is not just individual holiday-goers who are losing out with their travel money. An increasingly globalised economy means many businesses are being hit hard when it comes to international money transfers.
Small to medium sized businesses paid $150 million in exchange rate markups on exports during 2016, 150 times more than the $1m advertised to them in upfront fees.
Hinrikus has launched the ‘Ban Fake Rates’ campaign and calls on consumers to contact their MPs and banks to solve the problem surrounding “real exchange rates”.
“It’s time to take a stand. Aussies deserve a fair go and should get the real exchange rate when we make an international money transfer. Banks should end their deceptive practices and the Australian Government should make sure they don’t continue to rip off customers,” he said.
Mozo’s tips for cheap IMT’s
- Avoid your bank: Big banks may offer convenience but generally they don’t offer the most competitive exchange rates so consider some other IMT providers if you’re going to be transferring money overseas regularly.
- Check the fees: Don’t forget to compare all of the extra costs that could creep up on you and keep Mozo’s IMT jargon buster handy when doing so.
- Find the best exchange rate: Mozo makes it easy to shop around for the best exchange rate using our IMT comparison tables.
Mozo’s travel money tips
- Don’t use your Aussie card overseas: An absolute money-drainer, you won’t be getting a good exchange rate and accessing your money will cost you. Consider pre-paid travel cards as a travel money alternative where you can lock in an exchange rate before your trip if you know your budget.
- Avoid credit card fees: While most credit cards have foreign exchange fees of up to 3% there are some that are designed specifically for travel that have no fees such as the 28 Degrees Platinum Mastercard. To compare overseas travel credit cards head to Mozo’s Top Travel Credit Cards comparison tables.
- Avoid debit card fees: Prior to travelling, make sure to try Mozo’s debit card fee finder to see how much your bank will charge you for overseas transactions and withdrawals. Unhappy with your debit card fees? Consider switching here.
Wondering how to make a regular business payment overseas or if PayPal is a good option for your IMT’s? Head to Mozo’s International Money Transfer guides hub for tips and tricks on how to negotiate your next international money transfer.